Unilever to spin-off ice cream business

Alongside the spin-off, Unilever announced a "productivity programme", which will hit 7,500 jobs.

Fiona Holland March 19 2024

Unilever has announced plans to separate its ice cream business from the company.

In a statement, the Ben & Jerry's manufacturer, which is the world's largest producer of ice cream, said demerging the assets into a listed company was "the most likely separation route".

Unilever said the separation would make the FMCG giant "a standalone, more focused business", that will have more "operational and financial flexibility".

However, the Magnum owner said it would look into alternatives to a demerger "to maximise returns for shareholders", and that further details would be given "in due course".

The ice cream unit has "a very different operating model", compared to Unilever's other units of Nutrition, Beauty & Wellbeing, Personal Care and Home Care, it said.

Focusing on four core businesses is expected to allow the company to grow the company more efficiently via "brands with global reach or significant potential to scale".

The company said it expects to see higher margins, as well as sales growth in the mid-single digits.

The separation of the ice-cream business is to start with immediate effect, with the process to be complete by the end of 2025.

“We view the demerger of ice cream as a clear positive step towards making Unilever a faster growing company. Ice cream has clearly been dilutive,” analysts at Barclays wrote in a note to clients today.

Wider “productivity programme”

Alongside the business spin-off, the company also announced the launch of a "productivity programme", which aims to cut costs by some €800m ($867.8m) between now and 2027.

The shake-up is expected to impact 7,500 employees at the company, with the majority of these being office-based positions.

Expenses from the business restructure will now make up around 1.2% of Unilever's turnover for the next three years, it said.

Commenting on the news, Hein Schumacher, CEO of Unilever said: “Under the growth action plan we have committed to do fewer things, better, and with greater impact.

"The changes we are announcing today will help us accelerate that plan, focusing our business and our resources on global or scalable brands where we can apply our leading innovation, technology and go-to-market capabilities across complementary operating models.

“Simplifying our portfolio and driving greater productivity will allow us to further unlock the potential of this business, supporting our ambition to position Unilever as a world-leading consumer goods company delivering strong, sustainable growth and enhanced profitability."

Ian Meakins, the chair of Unilever, added the restructuring “will help create a simpler, more focused, and higher performing Unilever. It will also create a world-leading ice cream business, with strong growth prospects and an exciting future as a standalone business”.

Ice cream currently makes up 13% of Unilever's annual turnover. The group booked €7.9bn in revenue from ice cream in 2023, up 0.5% on 2022.

The Cornetto maker's underlying sales growth (USG) from ice cream was up 2.3% but volumes were down 6%.

At an investor event last December, Schumacher was asked whether Unilever intended to spin-off ice cream, a question he avoided answering directly.

He did note, however, the cost structure for the unit was "not acceptable", and that the company had been battling competition from "pure ice-cream players".

He also said: “If you think about it, ten years ago, 15 years ago, ice-cream competition was very much companies like ours that also had ice cream. And it means that we need to make sure that we run the ice-cream business as an ice-cream business. 

Ice cream was split off from Unilever's other food units at the start of 2022, when former CEO Alan Jope announced a reorganisation of the company into five new business divisions.

Towards the end of 2022, Unilever was reported to be looking to sell some of its ice cream brands in the US. The company declined to comment at the time.

Shares in Unilever were up 3.24% at 3,935p at 11:33 GMT today.

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