Unilever's new chief executive has defended his ethical reputation as questions about so-called greed and its continued presence in Russia mount. .
Hein Schumacher, who took over earlier this month, insisted that Unilever acted responsibly after The Telegraph said over the weekend that it would comply if employees were called in to attack Ukraine.
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He also said that Unilever is “very mindful” of the rising costs consumers in Europe are facing due to the soaring prices of basic kitchen products.
The company said the UK was “past the peak of inflation” as executives insisted they were protecting consumers, not ripping them off.
Mr. Schumacher's comments came as FTSE 100 Marmite and manufacturer Hellman disclosed first-half profit growth driven by nearly 10% price growth
These figures – and the company's rising profits – may prove moot as Management on Competition and Markets is preparing to study in depth the prices charged by food suppliers.
At the same time, Unilever is grappling with serious problems in Russia, where its employees could be drafted into the war with Ukraine, and the government of Vladimir Putin is seizing control of Western firms that choose to stay in the country.
That leaves Schumacher, The Dutchman tasked with running the company is back to basics, with a set of extremely confusing problems to solve – in less than a month at his new job.
Perhaps the most controversial of these is the company's continued business in Russia, which has prompted the Ukrainian government to accuse it of financing Putin's war. a fateful attempt to buy a competitor and disputes about giving domestic products a “social purpose” – the company insisted that it remains in Russia to sell such “basic” goods as tea and ice cream.
But after the decision to stay, when with most other Western companies fleeing the country, often at great cost, the food giant now faces Moscow conscripting its employees to fight Ukraine and the possibility of a forcible takeover of its operations by the state. .
Activists protest Unilever's continued presence in Russia near its London headquarters on Schumacher's first day as CEO Credit & Copyright: Chris J Ratcliff
Already this month, the Kremlin took control of the Russian subsidiary of French yogurt maker Danone, as well as Carlsberg's stake in a local brewery.
The move underscored the precarious position of the remaining Western companies, with Schumacher acknowledging on Tuesday that Unilever had no attractive options left.
Investec analysts recently warned that by staying, the company risks “losing more in reputation in around the world than it could save in the short term in monetary terms. .
“The first option is to abandon our business. We believe that this may actually lead to its nationalization, given all the events that have occurred recently,” he told reporters.
“The second option is to sell the business, but the reality is that we have not found a viable solution that meets our stated goals.
“None of the options are really good, but the final option is to run our business in a limited regime is the least bad, and that's where we are.”
At home in London, a different kind of danger may lurk on the horizon.
The Competition and Markets Authority (CMA) is preparing for a major investigation into brand owners such as Heinz and Unilever in an attempt to find out whether consumers are being deceived.
The regulator's latest investigation follows an earlier investigation into supermarkets, fueled by concerns about perceived “greed” – a phenomenon when companies increase prices under the guise of high nationwide inflation.
Shoppers spend more but buy less – food retailers sales compared to how much they sell, 2019 = 100. But officials are now ready to take a closer look at “branded and private label suppliers’ financial performance as part of the next phase.” of our grocery operations,” the ominous announcement reads.
According to the company's latest results, Unilever's own margin rose from 17% to 17.1%, leaving it with potential questions to answer.
The comparison for supermarkets is about 3 percent.
In the first half of this year, Unilever said core sales were up 9.1 percent from 2022, beating analysts' expectations. earnings rose 3.3 percent to 5.2 billion euros (4.5 billion pounds).
The main driver of sales was a price increase of 9.4 percent, which masked a 0.2% drop in volumes .
This was even more noticeable in the company's business in Europe, where prices rose 14.2% and sales fell 6.8% lower.
Graham Pitketley, the company's chief financial officer, pointed to numbers showing that the group's profit margins remain flat. 2.7% lower than before the pandemic.
“We have absolutely not gone through all the inflation we have seen,” he said.
“It is we who are aware of the pressure on buyers. You see this in the significantly lower margins we have as a group, and especially in Europe where the consumer is the hardest hit.
“I really want to just accept this one face – we share the pain and the responsibility.”
The company is not used to having its motives questioned as it has positioned itself as a model of corporate responsibility for decades and also, by According to critics, she used meaningless jargon.
At Jope, they included star fund manager Terry Smith, who claimed that Unilever “clearly lost the story.”
Today, Schumacher, whose roles were mostly financial before he took over Dutch Multinational dairy company Royal Friesland Campina has signaled that it wants to scale back on the company's sustainability ambitions.
“Sustainability is really important,” he said on Tuesday. “In my opening speech, I didn't really focus on this, but it's important to me.
“In doing so, I think it's worthwhile to focus on Unilever's sustainability program. move forward and focus on the things where we can really make a global impact and where we can stand out.”
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