One of the most memorable gags from long-running sitcom Only Fools and Horses centres on the road sweeper, Trigger, receiving a medal from the local council, awarded to him for saving taxpayers’ money by dutifully keeping the same broom for 20 years.
“This old broom has had 17 new heads and 14 new handles in its time,” Trigger muses, prompting cafe owner Sid to ask: “How the hell can it be the same bloody broom, then?”
Which, with impeccable Trigger-esque logic, brings us to consumer goods giant Unilever and its first-quarter results this week. The focus will be on the constituent parts that make up the giant group – the owner of brands ranging from I Can’t Believe It’s Not Butter and Flora to Persil and Surf washing powders.
At the firm’s margarine and spreads business, however, performance has been poor (they can’t believe it’s not better), prompting chief executive Paul Polman to put the division up for sale as part of a wider shakeup after he fought off a £115bn hostile takeover bid from US rival Kraft Heinz.
However, like Trigger’s broom, that move raises fundamental questions about the identity of Unilever, which was formed in 1929 by a merger between Merseyside soap makers Lever Brothers, and Margarine Unie, a Netherlands-based collection of margarine makers. Without spreads, can it still be Unilever?
Reckitt boss has a saucy plan
How do you earn a £14m pay packet? Simple: start with one totalling £23m, preside over a safety scandal involving one of your products in a significant foreign market, and wait for the 39% pay cut to kick in.
That is what has happened to Rakesh Kapoor, chief executive of consumer goods maker Reckitt Benckiser Group, which has a first-quarter trading update this week.
There will be much to discuss too, aside from: one, the fallout from the South Korean government saying in 2015 that 92 people were believed to have died from injuries related to humidifier sterilisers, sold by several companies including Reckitt; and two, how Kapoor is getting by on his measly stipend of about £40k a day.
Like Unilever, Reckitt is looking to shed a business, after putting its food group on the block earlier this month.
Selling the division, which includes French’s mustard and Frank’s RedHot sauce, could fetch more than £2.4bn, which might come in handy following Reckitt’s planned $16.6bn purchase of baby formula firm Mead Johnson.
Still, Kapoor’s plan to cut the mustard does seem to have cut the mustard, at least as far as shareholders are concerned. Shares are up since the announcement, at least giving some hope to Kapoor that he might get a fatter pay packet next time.
It can’t be a win-win for Primark
Prices are rising and wages aren’t, which means that our standard of living is falling. That irritation is likely to continue for a bit, too, with economists expecting the squeeze on inflation-adjusted wages to intensify over the coming months as the weak pound affects the cost of living.
But is that bad news for everyone? Possibly not, if it makes shoppers trade down to cheaper retailers such as Primark, whose owner Associated British Foods (ABF) announces first-half results this week.
Chris Beauchamp of financial spread betting group IG, mused: “Now, after recent data on wage growth has confirmed that UK shoppers’ pay packets are shrinking in real terms, we could see a boost for the cheaper end of the market, with Primark being a beneficiary.”
Meanwhile, in what appears to be the sort of luck you’d expect to land only at an Irish retailer’s door, ABF said in February that Primark had been enjoying a boost from tourists drawn to Britain by the cheap pound.
Sales at the cut-price fashion chain’s two stores in London’s Oxford Street were up 10% as the UK’s premier high street benefited from an influx of bargain-hunting visitors.
Still, if you’re thinking that Primark wins both ways, it may not prove as simple as that.
A weaker pound should eventually put some pressure on even this retailer, as suppliers tend to want to be paid in dollars. Primark has assured customers it is “working hard” on keeping costs down. We may find out just how hard this week.
