Unilever's Drastic Changes in Indonesia

By Richa Naidu

LONDON (Reuters) – Unilever (LON:ULVR) is set to make "drastic" changes in Indonesia, according to its finance chief on Thursday, as consumer boycotts against multinational brands increase due to the war in Gaza, further complicating the company’s existing distribution issues.

The manufacturer of Dove soap, Knorr stock cubes, and Ben & Jerry's ice cream noted in February that sales growth in Southeast Asia had been impacted by Indonesian consumers avoiding multinational brands in response to ongoing geopolitical tensions.

After reporting slightly better-than-expected quarterly sales, Chief Financial Officer Fernando Fernandez expressed that the company intends to modernize its brand image to reflect significant societal changes. He remains optimistic for improvement in the next six months.

Barclays analyst Warren Ackerman remarked during the call that Unilever's Indonesian operations have underperformed for nearly a decade, questioning why investors should trust this turnaround would be different.

Unilever's Indonesian branch reported an 18% revenue decline in the third quarter, primarily from reduced sales volumes.

CEO Hein Schumacher recognized "long-standing issues" within the country, clarifying that significant interventions in Q3 and Q4 would not bear immediate results.

CFO Fernandez stated that a revamp of the distribution system is in progress to stabilize prices, noting some early successes in regaining market share lost to the consumer backlash tied to Middle East tensions, recovering about a quarter of lost market share.