Unilever is to split off its ice cream business and cut 7,500 jobs as new chief executive Hein Schumacher tries to deliver on his promise to turn round the performance of one of the world’s largest consumer goods groups.
Setting out the measures on Tuesday, Unilever said that the ice cream division, home to brands including Wall’s, Magnum and Ben & Jerry’s and accounting for 16 per cent of overall sales, would be better as a standalone business.
Schumacher, who since taking the top job last July has been under intense pressure to shake up Unilever after several years of lacklustre growth, said that the ice cream business would probably be listed by the end of 2025, but that no final decision on how it would be separated had been taken.
The group was “open to options” on where the business, which is in the process of moving to an office in Amsterdam, could be listed, Schumacher added. The business currently operates from Rotterdam, alongside the food division.
Shares in Unilever rose as much as 5 per cent on Tuesday, lifting the FTSE 100 company’s market capitalisation to £98bn.
Laying out the reasons for exiting the ice cream business, Unilever pointed to the lack of overlap on supply chains with the rest of the company and said that it was also more seasonal.
Barclays estimates that the ice cream business could be worth €17bn and puts Unilever’s market share at 20 per cent, making it the industry leader.
Advisers said that the ice cream unit could draw interest from private equity groups. “It’s an invitation with a fuse” for buyout investors, said one. Some previous Unilever businesses that have been separated out went on to be acquired by private equity groups. CVC bought Unilever’s tea business for €4.5bn in 2021 while KKR acquired its spreads business in a €7bn deal in 2017.
Bernstein analyst Bruno Monteyne said that while the move is a step in the right direction he doubted how effective the separation would be in terms of boosting growth. “Did the previous disposals make any difference to Unilever? The answer is no.”
Jettisoning ice cream will leave Unilever with four businesses covering beauty and wellbeing, personal care, home care and nutrition.
The combination of Unilever’s sprawling operations — the group also makes Marmite, Hellmann’s and Dove soap, as well as cleaning products Domestos and Cif — and sluggish growth attracted the interest of billionaire activist Nelson Peltz , who agitated for changes.
Unilever has lost significant market share over the past few years while sales growth has lagged behind rivals such as Procter & Gamble. Shares have fallen 8 per cent over the past five years, compared with a 7 per cent rise in the benchmark S&P 500 Consumer Staples over the same period.
Alongside the plan for the ice cream business, Unilever on Tuesday said it would deepen cost-cutting measures and was targeting €800mn of savings over the next three years.
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About 7,500 jobs will be axed as part of the programme, with the majority “office-based”. Unilever, which employs about 128,000 people, did not say where the jobs would be cut or from which functions.
Fernando Fernández, Unilever’s new chief financial officer, said that the group was implementing a “comprehensive technology programme” as part of the cost savings and that AI would play a role.
Hermann Soggeberg, chair of Unilever’s European Works Council, claimed that since Peltz had joined the board the company has stopped involving the union in discussions around disposals, and that he was “disappointed” it had not been informed of such a major change.
“It’s been 25 years since we last had those numbers of redundancies,” he said.