Unilever selling off ice cream business

Unilever has announced steps to accelerate its growth action plan (GAP) through the separation of its ice cream division and the launch of a major productivity programme.

The board believes that Unilever should be increasingly focused on a portfolio of brands with strong positions in categories that have complementary operating models. Ice cream has a very different operating model, and as a result the board has decided that the separation of ice cream best serves the future growth of both ice cream and Unilever. It will continue to operate a nutrition business group.

The board says it is is confident that the future growth potential of ice cream will be better delivered under a different ownership structure. Ice cream’s characteristics include a supply chain and point of sale that support frozen goods, a different channel landscape, more seasonality and greater capital intensity.

Unilever’s ice cream brands delivered turnover of €7.9 billion in 2023, or about 13% of the company’s total sales. The business has five of the top 10 selling global ice cream brands including Wall’s, Magnum and Ben & Jerry’s, with exposure in both the in-home and out-of-home segments across a global footprint.

Under new leadership, ice cream is already making significant operational changes at pace that are expected to drive stronger performance, Unilever says. These include improved productivity and efficiencies, product rationalisation, and investment behind significant innovations.

A demerger of ice cream is the most likely separation route, and in that case Unilever expects the company to operate with a capital structure in line with comparable listed companies. Other options for separation will be considered to maximise returns for shareholders. The costs and operational dis-synergies relating to the separation of ice cream will be determined by the precise transaction structure chosen. Separation activity will begin immediately, with full separation expected by the end of 2025. Unilever also expects to cut 7,500 jobs in its workforce globally, amounting to 6% worldwide, as part of its GAP plan.

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