Cost reduction and transformation combined with war shocks, Unilever (UL.US) freezes hiring

Zhitong Finance APP learned that, due to the Iran war causing costs to rise, Unilever (UL.US) will freeze hiring worldwide for three months. In a statement, a spokesperson said: “Given the uncertainty of external conditions, we have decided to temporarily pause hiring. We always maintain a flexible operating model and will adjust plans as needed.”

In addition to a series of cost-cutting measures such as layoffs and adjusting the bonus structure, this Dove soap producer will also take the step of freezing hiring. At the same time, the company is holding in-depth negotiations with U.S. flavor manufacturer Flavor? may be味好美(MIKC.US) to sell most of its food business.

Due to the Middle East conflict driving energy prices to spike, freight companies and ocean shipping companies have been adding surcharges one after another, leaving consumer goods companies facing the dilemma of soaring costs. In addition, the production costs of raw materials for plastic packaging and products such as detergents and shampoos are also rising day by day.

Morgan Stanley analyst Sarah Simon said in a report last week that Unilever may be particularly vulnerable to the Iran war because its ambitious sales growth targets rely on countries such as India—while India is especially exposed to rising LNG costs and reduced supply.

When Unilever CEO Fernando Fernandez took office last year, the company was in a phase of large-scale cost cutting. His predecessor had laid out a plan to save EUR 800 million (US$918 million) over three years by cutting 7,500 jobs, while Fernandez said he wanted to cut about 200 management personnel to address the company’s “mediocrity” problem internally.

Unilever is also undergoing a transformation, focusing on growth areas such as beauty and personal care. The company said it may announce as early as Tuesday that it will sell its food division to Flavor? may be味好美. Previously, Unilever had spun off its ice cream business into a standalone company—Magnum Ice Cream Co.