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March, 2024

Unilever to spin off ice cream division in bid for growth and focus

Unilever has announced plans to separate its Ice Cream division as part of its Growth Action Plan (GAP). The move is aimed at creating a more focused company, operating four Business Groups across Beauty & Wellbeing, Personal Care, Home Care, and Nutrition.

The Ice Cream division, which includes global brands such as Wall’s, Magnum, and Ben & Jerry’s, operates under a different model, including a supply chain and point of sale that supports frozen goods, a distinct channel landscape, more seasonality, and greater capital intensity.

In 2023, the Ice Cream division reported a turnover of €7.9 billion, with five of the top 10 selling global ice cream brands under its umbrella. The separation is expected to create a standalone business with operational and financial flexibility to grow its business and allocate resources in support of its distinct strategy.

A demerger of Ice Cream is the most likely separation route, with other options being considered to maximise returns for shareholders. The separation activity will begin immediately, with full separation expected by the end of 2025.

Unilever also plans to launch a comprehensive productivity programme, anticipated to deliver total cost savings of around €800 million over the next three years. The productivity programme is 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. Post separation, Unilever aims to deliver mid-single digit underlying sales growth and modest margin improvement.

Ian Meakins, Chair of Unilever, said, “The Board is determined to transform Unilever into a higher-growth, higher-margin business that will deliver consistently for all stakeholders. Improving our performance and sharpening our portfolio are key to delivering the improved results we believe Unilever can achieve. 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.”

Hein Schumacher, CEO of Unilever, said the Growth Action Plan is about committing to do fewer things, better, and with greater impact.

“The changes we are announcing today will help us accelerate that plan, focusing our business and our resources on global or scalable brands where we can apply our leading innovation, technology and go-to-market capabilities across complementary operating models. Simplifying our portfolio and driving greater productivity will allow us to further unlock the potential of this business, supporting our ambition to position Unilever as a world-leading consumer goods company delivering strong, sustainable growth and enhanced profitability,” he said. “We are committed to carrying out our productivity programme in consultation with employee representatives, and with respect and care for those of our people who are impacted.”