(News Bulletin 247) – The British hygiene and food industry giant announces that it is separating from its declining ice cream division. Unilever also unveiled a cost reduction program of around 800 million euros over the next three years.

Unilever is cleaning up its vast portfolio of activities. The British hygiene and agri-food giant, which owns 400 brands in more than 190 countries, has announced that it wants to separate from its ice cream business, which includes famous products such as Ben & Jerry’s, Magnum, Carte d’Or and Cornetto.

Unilever wants to give more clarity to its activities with a view to becoming a “simpler and more focused company, operating within four business groups in the areas of beauty and well-being, personal care, personal care at home and nutrition.

The split of the ice cream activity will allow Univlever to accelerate the implementation of its action plan, announced in October 2023, “which aims to do fewer things, better”. The aim being for the owner of the Dove or Skip brands to “stimulate constant and stronger growth in the gross margin and also to improve its productivity”.

Sales that fell last year

Last year, the ice cream division achieved $7.9 billion in turnover, Unilever recalls in today’s press release. But last month, the company reported “disappointing” underlying ice cream sales growth of 2.3%. Volumes then contracted by 6% over the year, “reflecting the impact of lower sales in home distribution channels”, Unilever reported at the time. “Inflation remained high and private labels gained share, with consumers looking for value propositions in this category” of products, the British group also indicated.

The ice cream business has “distinct characteristics compared to other operational activities”, explains Unilever, citing “a supply chain and points of sale adapted to frozen products”, “a different distribution landscape” and “a greater seasonality.

The board of directors says it is convinced that the separation of the ice cream division from the rest of the group will be the best option to “better exploit” the future growth potential” of this activity, “as an independent activity”.

“We believe a spin-off of the ice cream division makes sense given its slower growth profile and lack of cost synergies due to its supply chain,” explain analysts at Royal Bank of Canada cited by the Financial Times.

The group has certainly expressed its wish to separate from this division, but has not decided on the terms of this disengagement. “A split (…) is the most likely path of separation” but “other options will be considered in order to maximize returns for shareholders,” said Unilever, which however expects the operation to be completed by the end of 2025.

“This is great news for shareholders regarding the ice cream division, which has been a drag on the overall company for some time. The stock price is expected to respond accordingly this morning,” said Jack Martin, portfolio manager at Oberon Investments, as cited by Reuters.

On the London Stock Exchange, the announcement of a rationalization of Unilever’s business portfolio is very well received. Unilever shares jumped 3.65% to 3,951 pence after peaking at +5.8% in early trading.

A vast cost reduction plan

The company also announced a vast cost-cutting plan which, according to Unilever, would affect around 7,500 jobs worldwide. The company says it has identified “additional efficiency gains” that would deliver €800 million in savings over the next three years.

“The board is committed to transforming Unilever into a higher-growth, higher-margin business that will deliver consistent results for all stakeholders,” said Ian Meakins, chairman of Unilever.

“Simplifying our portfolio and improving productivity will allow us to further unlock the potential of this business [glaces]supporting our ambition to position Unilever as a leading global consumer goods company capable of strong, sustainable growth and increased profitability,” continued Hein Schumacher, Chairman and CEO of Unilever. .