Unilever trims production portfolio

Anglo-Dutch food and consumer products giant Unilever is putting
its Malaysian palm oil estates up for sale, according to a report
in the Malaysian publication, Business Times.

Anglo-Dutch food and consumer products giant Unilever is putting its Malaysian palm oil estates up for sale, according to a report in the Malaysian publication, Business Times.

According to analysts predictions, the sale should of the 21,700ha plantations should fetch at least RM500 million (€134.5m), and according to further reports there are currently 11 companies in the bidding.

The proposed disposal is part of the group's massive global restructuring exercise to prune off all non-core businesses.

Unilever, which currently sells 1,200 leading brands of products, will also narrow the range down to 400 over the next two years. Production facilities all over the world are expected to be restructured in line with the plans, leading to possible closures and consolidations.

Wholly-owned subsidiary Palmol Plantations managing director and chairman Martin Rushworth said Unilever had found that the Malaysian operations no longer fit into the group's plans.

"We feel that the plantations do not sit well with our overall business strategy of promoting consumer brands,"​ he said.

Unilever operates oil palm estates in Sabah (13,500ha) and Johor (8,200ha). It owns 70 per cent of Palmol Plantations Sabah, and the Sabah Land Development Authority the rest.

The Kluang-based Palmol Plantations is wholly-owned by the group.

Rushworth said Am Merchant Bank has been appointed to manage the disposal process, including making a list of potential buyers.

Unilever started its palm oil operations in Malaysia in the 1950s and currently employs about 1,000 workers.

Palmol replants every 10 years and produces about 120,000 tonnes of crude palm oil annually. The company also operates a research and development centre.

Apart from Malaysia, Unilever also owns oil palm plantations in Africa.

"It makes sense for Unilever to sell off Palmol as it is much cheaper simply to source for raw materials rather than operate your own plantations,"​ an industry observer said.

Unilever, with operations in 40 countries, had announced a sweeping reorganisation in February 2000 aimed at boosting sales by between 5 per cent and 8 per cent a year and achieving profit margins of between 16 per cent and 17 per cent by 2004.

It recorded sales of US$44.81 billion and earned a profit of US$1.04 billion last year. Worldwide, the group employed a total of 295,000 workers in 2000. Among the group's product brands are Lipton tea, Knorr and Walls ice cream.

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