LONDON, March 19 — British consumer goods giant Unilever today said it would separate its ice cream unit, whose top-selling products include Ben & Jerry’s and Magnum, in a likely demerger set to contribute to thousands of job cuts.
Creating a standalone ice cream company is part of a major overhaul that would “impact” about 7,500 mainly office-based jobs worldwide and save €800 million (US$870 million) over the next three years, Unilever said in a statement.
Unilever employs about 128,000 worldwide.
“The separation... in combination with the productivity programme will ensure that Unilever’s financial and management resources are focused on its strongest, global or scalable brands,” the statement added.
“These will have the capability to drive category expansion and deliver accelerated, sustainable levels of growth and improved profitability.”
Unilever’s key brands also include Cif surface cleaner, Dove soap, Hellmann’s mayonnaise and Marmite yeast spread.
Tuesday’s announcement comes after Unilever in December agreed to sell Elida Beauty, its non-core beauty and personal care division, to US private equity firm Yellow Wood Partners for an undisclosed amount.
Two years ago, Unilever completed the sale of its global tea business, including brands Lipton and PG Tips, for €4.5 billion to private equity group CVC Capital Partners.
The ice cream unit has five of the 10 biggest global brands, including Wall’s Cornetto and Carte D’Or, and had 2023 revenue of €7.9 billion.
Unilever, like consumer groups worldwide, has sharply hiked prices for many of its goods in recent years to claw back rising costs in a climate of soaring inflation, deterring many customers.
Shares jump
Following Tuesday’s update, Unilever’s share price jumped 3.7 per cent to £39.50 in morning deals, topping London’s benchmark FTSE 100 index.
“The market likes the de-merger news, and it is a strong vote of confidence in the new CEO’s strategy of streamlining the business and cutting costs, which is a winner in the current market environment,” said Kathleen Brooks, research director at XTB trading group.
Spin-off activity will start immediately with full separation expected by the end of 2025.
Unilever added that the overhaul will leave it focused on four divisions: Beauty & Wellbeing, Personal Care, Home Care, and Nutrition.
“The board believes that Unilever should be increasingly focused on a portfolio of unmissably superior brands with strong positions in highly attractive categories that have complementary operating models.”
It added: “After separating Ice Cream and implementing the productivity programme, Unilever will have a structurally higher margin.”
Unilever noted that the ice cream business has “distinct characteristics” when compared with its other businesses, that “include a supply chain and point of sale that support frozen goods, a different channel landscape, more seasonality, and greater capital intensity.”
Ben & Jerry’s was founded by American school friends Ben Cohen and Jerry Greenfield in 1978. It was acquired by Unilever in 2000.
The US subsidiary, known for its political activism, failed in 2022 to block parent Unilever from selling its ice cream in West Bank settlements, which it said would run counter to its values.
Hein Schumacher took over as Unilever chief executive last year following a turbulent period for the group.
The former head of Dutch dairy and nutrition firm Royal FrieslandCampina replaced Alan Jope, who had come under fierce pressure from activist investors.
Jope had led Unilever’s failed US$50-billion bid for the former healthcare unit of drugmaker GlaxoSmithKline. — AFP
