Unilever set the stage for a major internal upheaval yesterday, announcing 20,000 job cuts, factory closures and business disposals, including the sale of its American laundry detergent business.

At a stroke Patrick Cescau, the Unilever chief executive, is ending years of punishing American price wars with its major competitor, Procter & Gamble. The US laundry brands – All, Surf and Snuggle, which generate €800 million (£538 million) in turnover annually – will go on the block.

“It’s not a defeat,” the Unilever chief said. “Laundry is still central to Unilever.” The company generates more than €7 billion from soap powders and liquids worldwide, but revenues from the US brands had not been growing. He said that Unilever has decided to bite the bullet and redeploy resources.

Up to €2 billion of business assets will be sold in the coming shake-up, including the US laundry brands. Unilever will close between 50 and 60 of its 300 sites worldwide to save €1.5 billion by the end of 2010.

Much of the pain will be borne in Europe, Mr Cescau said, but he would not identify how many jobs and factories would be lost in Britain. “The majority” of the cuts would be achieved through disposals, he added.

The restructuring and a strong set of half-year sales and earnings lifted Unilever shares, which were up 4.3 per cent, helped by a prediction from the company that underlying revenues would grow at a rate “at the upper end of the 3.5 per cent range”.

During the first half, the consumer products divison that includes Lipton tea, Knorr soups and Hellmann’s mayonnaise as well as Persil detergent in the UK, managed to raise its game after a period of weakness in sales growth and margins. For the first six months to June 30, underlying revenues were up 5.8 per cent, while net profit rose 10 per cent to €2.2 billion.

Mr Cescau said that Unilever was embarking on a radical shake-up from a position of strength with operating margin gaining ground as underlying sales improved.

He hoped that the streamlining would deliver even better margins and Unilever is targeting an overall operating margin of 15 per cent by 2010. In the first half the margin was 13.7 per cent, slightly down after restructuring charges. More than half of the targeted €1.5 billion in savings will be achieved from cutting overheads, while 40 per cent will be in supply chain efficiencies.

Last month, Unilever announced it would cut half the senior UK management, saving about €70 million and up to 40 jobs have now gone. As many as 350 managers in marketing, sales and support positions, will go.

Italy is also being targeted in the headcount reduction, with sales and administration posts to be reduced from 1,500 to 900 by 2008.

Mr Cescau is pushing more aggressively at his “One Unilever” project, streamlining the organisation from a country to a category focus, thereby reducing the managerial headcount in regional headquarters.

Unilever would not provide an estimated value for the American laundry business but analysts at Investec yesterday suggested that sale proceeds of €800 million to €1 billion might be achieved, assuming the business had a 10 per cent operating margin. Some analysts were surprised at the relatively small size of the US laundry operation. “After years of competition, it must be a diminished business,” one said.

Unilever’s UK business struggled in the first half, with a weak performance in hair care and ice-cream. The group did better on the Continent, particularly in Germany, where it gained market share and in France, where sales are recovering.

Sales growth in the US was strong with a 4.7 per cent advance, while Asia achieved an underlying sales increase of 11 per cent.

Mr Cescau said that the company was achieving price increases in Asia and the Americas but in Europe prices were marginally lower.

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