Unilever will spin off its ice cream business and cut 7,500 jobs as part of a new cost-saving programme, it was announced today.
Investors cheered the plan, with Unilever shares up 5.4% in early trading.
The spinoff, which will include brands such as Magnum and Ben & Jerrys, will begin immediately and is expected to be complete by the end of 2025.
Restructuring
The chief executive of Unilever Hein Schumacher said on a call with journalists that the ice-cream business is “in the process of moving to a separate head office in Amsterdam.”
Schumacher added, however, that he was “open to options” regarding where the new ice cream company could list.
Unilever aims to deliver mid-single-digit underlying sales growth with modest margins after the split, it said.
The ice cream brands account for about 16% of Unilever’s global sales. In some countries, it contributes as much as 40% to the company’s sales.
The consumer goods group also launched a plan to save around €800 million over the next three years.
The proposed changes will see around 7,500 jobs impacted globally, mostly office-based.
The total restructuring costs are expected to be about 1.2% of overall turnover for the period.
Cuts are expected to impact about 5.9% of Unilever’s 128,000 workforce.
Schumacher said they were looking “across the organisation,” including in the head office and businesses in other countries, for cuts.
Unilever’s stock has dropped over the past year by 5.8%. Following today’s announcement, shares jumped 5.4% in early trading.
‘A Big Agenda’
The move is a big step for Schumacher, who laid out plans last year to win back investor confidence by simplifying the business following underperformance by Unilever.
His predecessor Alan Jope was criticised for allowing the group’s portfolio to grow to about 400, which left big performers neglected.
Oberon Investments portfolio manager Jack Martin welcomed the announcement, saying share prices should respond accordingly.
Schumacher announced in October that the company would focus on 30 key brands that account for 70% of sales.
It would also work on improving its gross margin and not undertake any major or transformational acquisitions.
Investor Nelson Peltz last month announced he was “fully behind” a strategy to re-invigorate the company.
The statement reinforced Peltz’s support for Schumacher, whose appointment he endorsed last year.
“We have a big agenda,” Schumacher said today. “This is going to be a very busy period for the next 18 months or so.”
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