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Unilever To Cut SKUs and People

December 5, 2013

Will reduce lineup by 30% and cut 2,000 jobs in the new year.

A couple of weeks ago, Unilever CEO Paul Polman warned that gains in emerging markets—his company's bread and butter—were disappearing. Now, he's taking drastic measures ahead of the slowdown. The company will cut the number of individual products it sells by 30% by the end of 2014 to become more efficient and navigate a global economic slowdown it admits it was slow to confront.At the same time, it is cutting about 2,000 jobs and will continue to adjust its portfolio.

"The global economy has calibrated down about 1-1.5% and we probably should've done a better job seeing it coming," said Polman in a presentation in London that was broadcast over the internet.

"We're using that opportunity to step up the performance and drive new energy into the organization."

In October, Unilever posted slower sales growth for the third quarter after demand was hurt by the devaluation of some emerging market currencies and aggressive promotions in the US by rival Procter & Gamble Co.

"We lost our competitiveness," Polman said.

Unilever intends to save 500 million euros ($683 million) next year, after cutting about 2,000 jobs this year, improving its supply chain and making various processes more efficient.

Unilever is shifting more of its focus to its larger brands, including the 15 that each generate over 1 billion euros in annual revenue. Polman said it will continue to sell non-core, underperforming brands and buy attractive bolt-on brands when possible.

"The overall portfolio is perhaps not as robust yet as some of our competitors, but you have to deal with the deck of cards you've been given," Polman said.

Chief Financial Officer Jean-Marc Huet said most brands to be sold will be from Unilever's food business, which includes Knorr soups and Hellmann's mayonnaise, rather than the personal care side, which makes Radox soaps, Lux shampoo and Vaseline.

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