Fund manager Terry Smith has accused Unilever of “losing the plot” as he attacked the firm for its focus on sustainability and putting purpose over profit.
Smith, founder of Fundsmith Equity Fund and major investor in Unilever, blamed the consumer goods group for his fund’s underperformance last year as it trailed behind its benchmark.
In his annual letter to to investors in the Fundsmith Equity Fund, he wrote: “Unilever seems to be labouring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business.”
Smith mocked the firm’s focus on putting purpose in its products, writing that “a company which feels it has to define the purpose of Hellmann’s mayonnaise has, in our view, clearly lost the plot.”
Smith also took aim at the firm’s decision to stop selling Ben & Jerry’s ice cream in Israeli settlements in the occupied Palestinian territories, which he described as the “the most obvious manifestation” of the firm’s focus on purpose over profit.
In the past year, shares have fallen 9 er cent when the UK market has risen 11 per cent, while pre-tax profits have fallen for two consecutive years from €12.4bn (£10.3bn) in 2018 to €8bn in 2020.
Unilever has been on a push to place purpose at the heart of its product base since 2019 when chief executive Alan Jope said that ““in the future, every Unilever brand will be a brand with purpose”.
Jope said he the firm would offload those that “are not able to stand for something more important than just making your hair shiny, your skin soft, your clothes whiter or your food tastier”.