Unilever Plc plans to separate its ice cream division, which includes renowned brands like Ben & Jerry’s and Magnum, into a standalone business as part of a cost-cutting program that would also result in 7,500 job losses.
The separation process will begin immediately and is anticipated to conclude by the end of 2025.
“The separation of Ice Cream and the delivery of the productivity programme 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,” said Ian Meakins, Chair of Unilever.
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In a broader initiative to boost growth, CEO Hein Schumacher is overseeing the streamlining of the UK consumer-goods giant. The company has emphasized that the job reductions are integral to its Growth Action Plan, targeting €800 million in cost savings over the next three years.
The Unilever Board holds the view that the company should concentrate on a portfolio of exceptionally superior brands within highly appealing categories, supported by complementary operating models. With the Ice Cream business boasting its own unique operating model, the Board has concluded that separating this division will enhance future growth prospects for both Ice Cream and Unilever, as stated in a release.
The company announced that it will explore various options for the separation, with a demerger likely resulting in the establishment of a new publicly listed company being the most probable outcome.
Unilever, known for brands such as Hellmann’s mayonnaise and Domestos cleaners, disclosed that its ice cream business accrued sales of €7.9 billion ($8.6 billion) in 2023.
After the separation of the Ice Cream business and the implementation of its productivity program, Unilever envisions attaining a “structurally higher” margin. Subsequent to this division, the company forecasts achieving mid-single digit underlying sales growth and modest margin improvement.
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“The separation of Ice Cream will assist Unilever’s management to accelerate the implementation of its GAP, announced in October 2023, which is focused on doing fewer things, better, with greater impact to drive consistent and stronger topline growth, enhance productivity and simplicity, and step up Unilever’s performance culture,” it said.
Building on the initial advancements of the GAP initiative, Unilever stated that it has pinpointed additional opportunities for improving efficiency, which can now be accelerated.
“The proposed changes are expected to impact around 7,500 predominantly office-based roles globally, with total restructuring costs now anticipated to be around 1.2% of Group turnover for the next three years (up from the around 1% of Group turnover previously communicated),” the company added.