Unilever CEO Paul Polman steps down: analyst reactions

Pinar Ergun, UBS Investment Bank

“We believe a change at the top of the company has been widely anticipated, and Mr Polman’s retirement will not come as a major surprise. The appointment of an internal candidate is likely to ensure continuity as Unilever makes progress towards its 2020 targets.

“In recent years, Unilever has been a prolific acquirer of small assets and most of these acquisitions have taken place in the beauty & PC division. Unilever has also entered the prestige beauty category, but it is yet to scale it up. With Mr Jope appointed as the new CEO, we would expect investors to debate the merits (eg diversification) and the shortcomings (eg ROIC impact, brand proliferation) of such a M&A strategy more openly.”

Jamie Norman, Société Générale 

“This is news that has been long-awaited by the market. Jope was one of several strong internal candidates - ’an embarrassment of choice’ is how Polman put it to us on our Edinburugh roadshow 12 months ago. 

“This move will allow for continuity in the newly formed food & refreshment division. After a decent Q3 with cautious optimism over EMs, hopefully the timing of the announcement indicates that this proud CEO will go out on a high note - a goodish Q4 .

“Hopefully too, the excellent - in our view - CFO Graeme Pitkethly (considered a possible candidate) will stay on.

“Alan Jope’s successor is yet to be announced but with Paul Polman staying on till 1H19, we hope the transition will be smooth and that he goes on a high note with a good Q4.”

Jeff van der Eems, former CEO of United Biscuits (now Pladis)

“I never met him, but what I’ve seen is an incredibly strong CEO in terms of both delivering results and creating a really strong vision for the future.

“We all did our work on environmental sustainability, but he was way out ahead of us. To do that and deliver solid results and make bold decisions on portfolio is the sign of a good leader.

“He should be remembered fondly from a Unilever point of view. People forget Unilever was in a bit of funk. He came in and really got it refocused – and the results were awfully good.”

Neil Wilson, chief market analyst at Markets.com

“The botched plan to move the company HQ to Rotterdam was a sorry way to finish an exceptional career at the company. Since that move failed, you had the sense that investors were a little put out and there was clearly a desire for a fresh start and a new leader to take the company in a different direction. The argument about protecting Unilever from hostile takeovers was always on shaky ground – increasing gearing would do that without needing to move HQ and without leading to a huge swathe of forced institutional investors.”

Read more: Who is Alan Jope, Unilever’s new chief executive?

 

Martin Chilcott, founder and chairman, 2 Degrees

“Some years back Paul Polman must have scanned the horizon and seen the challenges his business faced, not just as a threat to Unilever’s share price, but as a threat to the very existence of modern civilisation.

“He understood the inadequacies of simply maximising short-term shareholder value and the limitations of the ability of the corporate balance sheet to reflect society-wide risks. He understood the fundamental connection between natural and social capital and long-term financial capital.

“He and a few others have placed ‘purpose’ at the heart of business and business at the heart of finding a solution to climate change and the swarm of complex challenges the world faces today. One of his legacies has been to inspire a small army of corporate sustainability warriors within and without Unilever.”

Frederic Fernandez, fmcg strategic advisor

“It may look sudden but it was a succession that has been carefully planned for the last two years. After Indra Nooyi at PepsiCo, another great leader is then stepping down this year.

“Very few leaders had a so successful a tenure in the industry and got the opportunity to hold senior roles at P&G, Nestlé and Unilever. Among his accomplishments, we could mention TSR performance, how he fended off the Kraft-Heinz takeover attempt and how he has consistently championed sustainability… the list is long and many will examine in great details his legacy, his success and his failures.

“What is sure is that Paul Polman will be missed and we should not be surprised to see him playing a greater role soon as a driving force for sustainability and climate change in particular. Chapeau Mr Polman and all the best for the challenges ahead.”

Felicia Rosenzweig, partner at brand & marketing consultancy Prophet

“Over his long tenure, Paul Polman has been a key driver of strengthening the relevance of Unilever: as a business, as a steward of global and much-loved UK brands, and as a brand in its own right.

“In particular, he has embraced the importance of purpose, and committed to sustainability as a long-term platform for the company. In selecting Alan Jope as Polman’s successor, Unilever seems intent on staying this course, which is generally good news for the direction of the corporate brand and for the brands in the portfolio.

“As Polman stepping down was already in the works, there is unlikely to be any damage to the brand from the move. And following the recent shareholder rejection of the HQ move to the Netherlands, new leadership, albeit internally sourced, could create new energy both internally and externally.”

Martin Deboo, Equity Analyst at Jefferies International Limited

”So the mercurial Polman is moving on, after nearly ten years. While always provocative, we think he will go down in history as a successful CEO of ULVR. €100 invested in the NV on the eve of his appointment is worth €375 now, relative to CHF 239 at NESN. His singular contribution, to our eyes, was to give ULVR its top line growth mojo back and to galvanise the organisation internally, behind the Sustainable Living Plan. But his tenure has ended on a downbeat note with the collapse of the simplification exercise. It’s therefore not clear to us what purpose is served by a six-month handover period, given the mood of shareholders, Jope’s presence on the ULVR Executive for nearly five years and the continuity provided by CFO Graeme Pitkethly.

“The PLC listing is as good as flat on the news, with the NV listing down 0.6% as we write. We suspect the difference between the two reflecting a belief that a British CEO will be less inclined to shift the UK listing, following last summer’s ill-fated simplification exercise. The more general reaction is in our view the net effect of the market’s eagerness to move on from Polman, offset by the absence of any instant positive shock that an external hire might bring. We also suspect that there is some disappointment that the market’s designated prince-over-the-water, Dave Lewis, hasn’t been lured back from Tesco.

“Jope’s priority to our eyes, alongside most staples CEOs, is to re-accelerate growth, which is running in the lower half of the guidance range of 3-5%, basis consensus. Central to this will be the re-acceleration of BPC, which is 40% of sales. But Jope has presided over a slowdown here, from the double-digits delivered under his predecessor (Lewis) to mid-singles now. Slower growth has been an industry-wide problem, but the fact remains that BPC has under-performed L’Oreal in 12 of the last 16 quarters. Key to the turnaround will be to ensure that ‘speedboat’ acquisitions such as Dollar Shave, the prestige skincare portfolio and Carver Korea (a deal which bears Jope’s imprimatur) earn out generous valuations.

”Jope will need to decide quickly (certainly by the Q4 in February) whether he wants to persist with ULVR’s 2020 plan and 20% margin target. We have been supporters, but have recently turned neutral on ULVR, partly because of top line concerns. So there is room for a debate, with investor fashions around the relative merits of the ‘European’ versus ‘3G’ models shifting again.”