Unilever Announces Ice Cream Unit Spinoff and Job Cuts in Cost-Saving Strategy
In a significant strategic shift, Unilever (ULVR.L), the consumer goods conglomerate, has announced plans to spin off its ice cream division, which includes beloved brands such as Magnum and Ben & Jerry’s. This move is part of a broader cost-saving initiative that will see the company reduce its workforce by 7,500 positions. The news was well-received by investors, with Unilever’s shares experiencing a 5.4 percent surge in early trading.
The spinoff process is set to commence immediately, with completion targeted by the end of 2025. Unilever anticipates that this restructuring will enable the company to achieve mid-single-digit underlying sales growth and modest margin improvements post-separation. In addition to the spinoff, Unilever has launched a cost-saving program aimed at trimming expenses by approximately 800 million euros ($869 million) over the next three years.
The job cuts, which represent about 5.9 percent of Unilever’s global workforce, will primarily affect office-based roles. The company projects total restructuring costs to be around 1.2 percent of turnover during the period. Jack Martin, a portfolio manager at Oberon Investments, commented on the announcement, “Great news for shareholders regarding the ice cream division as it has been a drag on the business as a whole for some time, share price should respond accordingly this morning.”
Unilever’s CEO Hein Schumacher, who has been tasked with improving the group’s performance since his appointment, had previously outlined plans to simplify the business structure. Schumacher’s strategy involves concentrating on 30 key brands that generate 70 percent of Unilever’s sales and improving gross margins without pursuing major acquisitions.
Despite the positive investor response, the job reductions cast a shadow on the announcement. “Obviously sad whenever that many people lose their jobs but (CEO) Hein Schumacher has been under pressure to deliver a better performance for the group since being appointed so it is not hugely surprising to see changes,” said Martin.
Schumacher reassured stakeholders that the workforce reduction would be conducted with care. “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,” he stated.
As Unilever embarks on this transformative journey, the market will closely monitor the impact of these changes on its operational efficiency and overall performance.
