Unilever CEO Faces Scrutiny Over Strategy Ahead of Half-Year Results
Fernando Fernandez must defend his focus on beauty and personal care, and a controversial deal with McCormick, as investors await sales figures.
Unilever Chief Executive Fernando Fernandez is set to face investor pressure next week as the company releases its half-year financial results. Fernandez is expected to defend his strategic direction, which prioritizes the conglomerate's beauty and personal care division, a move that has drawn criticism.
Controversial Deal Under Fire
Fernandez has faced backlash for agreeing to a £33 billion deal that combines products, including Marmite and Hellmann's, with U.S. spice giant McCormick. Veteran fund manager Terry Smith, who divested his entire Unilever stake earlier this year, has accused the company of misleading him regarding its restructuring. Smith characterized the McCormick deal as bearing "all the hallmarks" of activist investor Nelson Peltz.
Peltz, who has been a member of Unilever's board since 2022, is reportedly a key proponent of the McCormick transaction. His past activism has influenced changes at companies such as Cadbury and PepsiCo. The City, London's financial district, has viewed the McCormick tie-up as potentially unfavorable for Unilever investors who lack a vote on the matter. This deal follows Unilever's spin-off of its Magnum ice cream business, which was listed in Amsterdam last year.
Sales Growth and Investor Expectations
Investors will also be seeking evidence of Fernandez's success in revitalizing sales growth across Unilever's major brands. The company's sponsorship of the recent World Cup may have provided a boost to sales figures.
Analysts project that sales for the quarter ending June will approach £11 billion. Furthermore, the financial sector anticipates that the group's volumes will have increased by 2.7 percent in the first six months of the financial year, a rise from the 1.5 percent growth recorded in the same period last year.
Danni Hewson, AJ Bell's head of financial analysis, commented on investor sentiment: "Investors will be looking for evidence that Unilever can continue to grow volumes alongside anticipated price hikes, suggesting consumers are still willing to pay up rather than trade down."