Unilever has announced plans to separate its ice cream business and reduce its workforce by 7,500 employees in an effort to enhance its performance.
The company revealed on Tuesday its intention to operate the ice cream division, which includes brands like Wall’s, Magnum, and Ben & Jerry’s, as an independent entity. This division generated €7.9 billion in revenue last year.
While Unilever has yet to finalize how the separation will occur, it stated that a demerger is the most likely route and aims to complete the process by the end of next year.
Unilever has faced pressure from activist investor Nelson Peltz to simplify its operations, which encompass products such as Marmite, Hellmann’s, Dove soaps, and cleaning items like Domestos and Cif.
The decision to split off the ice cream business marks a significant move by CEO Hein Schumacher, who took the helm last year with a commitment to accelerating growth and enhancing shareholder returns.
Shares in Unilever surged by 5 percent at the opening of trading in London in response to the news.
RBC Capital analysts supported the decision, stating, “We believe a separation of ice cream makes sense given its slower growth profile and lack of cost synergies due to its cold supply chain.”
In addition to the ice cream separation, Unilever announced plans for €800 million in savings over the next three years through enhanced efficiencies. This will involve the elimination of approximately 7,500 jobs, primarily in office roles, from its current workforce of around 128,000 employees.
Ian Meakins, Unilever’s chair, emphasized the importance of enhancing performance and refining the company’s portfolio to deliver better results.
Former CEO Alan Jope faced criticism from investors for several missteps, notably an unsuccessful bid in 2021 for GSK and Pfizer’s consumer health business.
Unilever highlighted that its cost-saving program will focus on reducing complexity and duplication through technology, standardizing processes, and establishing operational centers of excellence to drive efficiencies.
The company also stated its commitment to optimizing its portfolio in its remaining four business groups, focusing on brands with global reach or significant scaling potential.
Following the ice cream business separation and cost-saving measures, Unilever expects to achieve a “structurally higher margin.”
