Unilever to spin-out ice cream brands amid €800m cost cutting plans

Unilever will spin off its ice cream unit into a separate, independent company as part of efforts to “simplify” the consumer goods giant and cut costs.

The group, whose brands also include Marmite, Domestos and Persil, also outlined plans to cut €800m (£684m) in costs over the next three years, which could impact 7,500 “positions primarily based in offices around the world.”

The shakeup follows a “disappointing” year for Unilever, whose chief executive Hein Schumacher vowed to turn around the FTSE 100 company after replacing Alan Jope in July.

Unilever’s ice cream business, which includes five of the world’s 10 best-selling brands such as Wall’s, Magnum and Ben & Jerry’s, achieved sales of €7.9 billion in 2023.

However, ice cream added to the group’s frustrations last year, with volumes falling 6 per cent.

Unilever said the split would begin immediately and that it hopes to complete the process by the end of 2025.

He added that the separation “best serves the future growth of ice cream and Unilever”, which will become “a simpler, more focused business”, operating four business groups in beauty and wellness. -being, personal care, home care and nutrition.

The move also eliminates possible future political issues related to Ben & Jerry’s stance on the ongoing war in Gaza.

Ian Meakins, Chairman of Unilever, said: “The Board is committed to transforming Unilever into a higher-growth, higher-margin business that will deliver consistent results for all stakeholders. Improving our performance and refining our portfolio is key to achieving the best results we believe Unilever can achieve.

“The separation of the Ice Cream sector and the implementation of the productivity program will help create a simpler, more focused and more efficient Unilever. It will also create a world-leading ice cream business, with strong growth prospects and an exciting future as a standalone business.

The group is targeting single-digit underlying revenue growth in the wake of the spin-off and a “modest” margin improvement.

Unilever’s €800 million productivity program, also announced on Tuesday, aims to drive “faster, more focused growth through simpler, more accountable organization, enabled by investments in technology,” said Unilever. he declared.

Schumacher said: “We are committed to doing fewer things, better and with greater impact.

“The changes we are announcing today will help us accelerate this plan, focusing our activities and resources on global or scalable brands where we can apply our leading innovation, technology and commercialization capabilities across complementary operational models.

“Simplifying our portfolio and increasing productivity will enable us to further unlock the potential of this business, supporting our ambition to position Unilever as a global consumer goods leader delivering strong, sustainable growth and improved profitability. “

Unilever shares were up 5.1 percent at £40.05.5 in early morning trading, narrowing year-on-year losses to 2.3 percent.

Matt Britzman, equity analyst at Hargreaves Lansdown, said shareholders were likely to welcome the spin-off of the ice cream business, which “has always seemed strange when compared to other product lines”.

He added: “It’s not a huge shock to see this decision, but it is something the previous management was unable to achieve.

“Unilever is not an overly expensive name at the moment, so expect markets to react positively to the news, perhaps more because of the decisive action than anything else.”