Nelson Peltz, having secured a seat on Unilever’s board, must be itching to draw on his well-thumbed playbook for reviving sluggish consumer product companies. The US activist investor earned his stripes at food groups Heinz and Mondelez and, most pertinently, at Unilever’s big US peer Procter & Gamble.
Peltz, through his New York hedge fund Trian, can claim prior success. Before P&G, Trian claimed to have raised the earnings per share of portfolio companies 780 basis points above the S&P 500 annually, achieving total shareholder returns 880bp higher than the S&P 500. While total returns during its tenure at P&G fell short of the US stock market benchmark they were handily ahead of the consumer sub-index.
Unilever has many of the hallmarks of P&G in 2017, when Peltz first took aim at the latter. The maker of Pampers nappies and Tide laundry pods was bloated, growth was sluggish and it was ceding market share to smaller, more innovative rivals. Unilever’s own sales fell on a volume basis in the first quarter. Its traditional matrix management structure hampers accountability.