FTSE 100 giant Unilever has placed a global freeze on hiring for at least three months as the Iran war wreaks havoc on global supply chains and fuel prices.
The London-based business, which owns Dove soap and Hellman’s mayonnaise, told staff the ban on hiring will affect “all levels” of recruitment and was taken in response to the “significant challenges” posed by the crisis in the Middle East.
Unilever was working to shed costs even before the Iran war broke out in February, as it looks to follow up the sale of its ice cream business by offloading the whole of its food brands arm.
The arrival of new boss Fernando Fernandez in March last year hailed a pivot towards the company’s beauty and personal care brands, as the firm shed thousands of jobs to become a “simpler, sharper and faster Unilever”.
Fernandez plans to save €800m over three years and shed 7,500 jobs – including 200 managers as the new chief executive takes aim at “mediocrity” in the firm.
But the company’s hiring freeze came after the Iran war, and the blockage of crucial shipping passage the Strait of Hormuz, choked global supply chains and sent fuel prices soaring.
The significant transit delays in the Middle East are making shipping more expensive, and the manufacture of plastic packaging is becoming more expensive.
Fabian Garcia, the head of Unilever’s personal care business, wrote in a memo first reported by Reuters: “Macro economic and geopolitical realities, especially in the Middle East conflict […] bring some significant challenges for the coming few months.
“With this in mind, the Unilever Leadership Executive team has agreed a global recruitment freeze at all levels. This will be effective immediately and last for a minimum of three months.”
The firm said it has taken the steps due to an “uncertain” external environment and will adjust its plans “as necessary”.
Unilever offloads food brands
Unilever also hopes to slim down its business by offloading its food brands, and said a sale could be confirmed as soon as Tuesday.
The firm, whose food brands include Bovril and Marmite, confirmed earlier this month it is in talks to sell its food arm to US spice and seasoning maker McCormick.
The deal would merge McCormick with Unilever’s foods businesses and see the US firm hand over nearly $16bn in cash up front.
Unilever and its shareholders would take a 65 per cent stake in the new company.
Since the talks over a sale were announced, analysts had been speculating about the complexity of the deal because McCormick is a far smaller company than Unilever’s food arm.
Unilever said: “Work remains ongoing to agree and finalise a transaction and it is possible that an agreement could be concluded today, although there can be no certainty that a transaction will be agreed.”
The company spun off its ice cream business – which included Magnum and Ben & Jerry’s – last year but chose to list in Amsterdam, in a blow to the London Stock Exchange.
Felix Armstrong
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