British consumer goods giant Unilever said on Tuesday it would spin off its ice cream unit, whose top-selling products include Ben & Jerry’s and Magnum, as a standalone business.
The company also unveiled a major overhaul, which it said would “impact” about 7,500 mostly office jobs worldwide and save 800 million euros ($870 million) over the next three years.
“The separation of Unilever and Ice Cream combined with the productivity program will ensure that Unilever’s financial and management resources are focused on its strongest, global or scalable brands,” Unilever said in a statement.
“These will have the potential to drive category expansion and deliver accelerated, sustainable levels of growth and improved profitability.”
The ice cream unit has five of the 10 biggest global brands, including Cornetto and Wall’s Carte D’Or, with turnover of 7.9 billion euros in 2023 — although underlying sales growth has been disappointing.
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“A break-up of Ice Cream is the most likely demerger route… Other demerger options will be considered to maximize shareholder returns,” Unilever added on Tuesday.
Spin-off activity will begin immediately with full separation expected by the end of 2025.
Unilever added that its overhaul will see it focus on four divisions: Beauty & Wellness, Personal Care, Home Care and Nutrition.
The multinational, which also makes Cif surface cleaner, Dove soap, Hellmann’s mayonnaise and Marmite yeast spread, predicted the move would improve its margins.
“The board believes that Unilever should increasingly focus on a portfolio of clearly superior brands with strong positions in highly attractive categories that have complementary operating models.”
He added: “Following the separation of Ice Cream and the implementation of the productivity programme, Unilever will have a structurally higher margin.”
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“Post-separation, Unilever aims to deliver mid-single-digit underlying sales growth and modest margin improvement.”
Unilever added that its ice cream business has “special characteristics” compared to its other businesses.
“These include a supply chain and point of sale that support frozen products, a different channel landscape, more seasonality and greater capital intensity.”
Source: AFP