Unilever to close plants, cut jobs

Purchase of Bestfoods cuts into earnings

April 28, 2001|By BLOOMBERG NEWS

ROTTERDAM, Netherlands - Unilever, the Anglo-Dutch maker of Lipton tea and Dove skin-care products, will slash 8,000 jobs and close more than 30 factories after acquiring rival Bestfoods for $24.3 billion last year.

The cuts are on top of the 25,000 staff reductions over five years the Dutch-British company had announced previously, said Michael Haines, a spokesman.

Unilever indicated yesterday that first-quarter net income before one-time items fell 53 percent after acquisitions raised borrowing costs.

Unilever is in the middle of a 5 billion euro ($4.5 billion) cost-cutting program to weed out three-quarters of its brands and focus on the 400 best sellers. It joins Siemens AG, Moulinex SA and other European companies firing workers to lift profit.

"For shareholders, it's positive," said Gerard Rijk, an analyst at ING Barings, which gave Unilever a "hold" rating. "It shows they're working on the integration of Bestfoods. It's a tough job."

The company's shares rose in the European and U.S. markets, closing in New York at $56.95, up $1.81.

The world's biggest maker of food and soap will complete a review of its plants in Europe and North America in the third quarter, Haines said. He couldn't say where the job cuts will be or how many have been made so far. They represent 2.7 percent of the work force as of Dec. 31.

Unilever expects savings of 395 million euros this year by combining Bestfoods, of Englewood Cliffs, N.J., Howard Green, head of investor relations, said in a conference call. By 2003, the company said savings will total 800 million euros.`"We are confident that we will fully achieve our targets without loss of business momentum or continuity," Green said.

Unilever has integrated the Bestfoods sales force, marketing department and back office in North America and has closed a factory in Canada.

It also plans to reduce its call centers in North America from three to one and is combining the research and development operations.

It also is merging the sales teams in Europe because it had two in each of 18 European countries, and it has moved Bestfoods' Brussels, Belgium, headquarters to its Rotterdam base.

Similar programs are in place in the rest of the world, the company said.

"They don't have any choice," said Thomas A. Russo, a partner in Gardner Russo and Gardner, which owned 26,950 shares as of March. "If they're going to be in the stores, they're going to have to have the efficiencies that are demanded by the Carrefours and the Wal-Marts."

Net income excluding charges fell to 339 million euros, or 33 cents a share, at current exchange rates, from 716 million euros, or 71 cents, in the first quarter of last year, Bloomberg calculations show.

Sales rose 20 percent to 12.74 billion euros.

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