Unilever PLC (LON:ULVR) has started a strategic review of its global tea business, which includes Lipton, Lyons and PG Tips.
Chief executive Alan Jope said in a release the FTSE 100-listed group continues to evaluate its portfolio and the review is part of that process.
The tea division is suffering soft demand for black tea in developed markets, prompting the company to focus on premium black tea, black tea in emerging markets and fruit and herbal variants.
The 2018 sale of its spreads business to US private equity firm KKR ended up hitting profits last year.
READ: Unilever upgraded amid “bleak” sentiment, Jefferies says downside risks now limited
The Magnum ice cream and Dove cosmetics producer posted a 33% slump in profits to €8.2bn for the year to 31 December.
Underlying sales growth came at 2.9% as anticipated due to a slowdown in South Asia, difficult trading conditions in West Africa and ongoing softness in developed markets, while turnover for the year was up 2% at €52bn.
“The market misses that management focus on scaling the brands of tomorrow whilst disposing of slow-growth assets should help Unilever become a mid-single-digit top-line growth company in time,” analysts at Liberum said in a note.
There is scope for €2bn cost savings per annum lifting margins beyond the 20% target, they added.
Shares rose 1% to 4,497p on Thursday morning.
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