Unilever to spin out ice cream business – including Ben & Jerry’s
Unilever is separating its ice cream business in a bid to create a leaner business, the consumer goods giant said this morning.
The firm’s near-$8bn turnover ice cream division includes Magnum, Wall’s and Ben and Jerry’s.
The separation of the business from the rest of Unilever will complete by the end of 2025.
The decision comes as Unilever, one of the world’s largest consumer goods companies, is ramping up what it calls its growth action plan in a bid to streamline operations and focus on its core strengths. It has also launched a major productivity programme.
Around 7,500 jobs will be affected by the ‘growth plan.’
Boss Hein Schumacher has been under pressure since taking the job to turn around a business largely felt to be underperforming, with a share price slump to match.
But Tuesday’s announcement appeared to please shareholders, with the stock rising over five per cent when the market opened.
In an update, the company said: “The Unilever Board is confident that the future growth potential of Ice Cream will be better delivered under a different ownership structure.
“Ice Cream has distinct characteristics compared with Unilever’s other operating businesses. These 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, such as Wall’s, Magnum, and Ben & Jerry’s, are among the top-selling global ice cream brands, with a combined turnover of €7.9bn (£6.8bn) in 2023.
The separation of the ice cream business will allow Unilever, it said, to become a more focused company, operating across four main business groups: Beauty & Wellbeing, Personal Care, Home Care, and Nutrition.
The separation process is expected to begin immediately, with full separation anticipated by the end of 2025. Unilever will explore various options for separation, including a demerger or sale
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.”
The productivity programme is expected to drive €800m (£684m) in total cost savings over the next three years through investment in technology, and offset any operational disruptions resulting from the separation of the ice cream business.
Although the company has hinted at a demerger, all separation routes are still possible according to Matt Britzman, equity analyst at Hargreaves Lansdown.
He said: “Action is what shareholders wanted to see from the new team at the top, and that’s what’s been delivered today. Ice Cream always looked like the odd one out when you compare it to other product lines, and performance has struggled of late.
“It’s not a huge shock to see this move, but it’s something prior management wasn’t able to deliver. Unilever’s not an overly expensive name at the minute so expect markets to react positively to the news, perhaps more due to the decisive action than anything else.”