Major consumer goods company Unilever Plc. (ULVR.L, UL) announced on Tuesday that it would be separating its Ice Cream division and implementing a significant productivity program in an effort to increase margin and accelerate growth. The actions are a result of its choice to expedite the Growth Action Plan.
The process of separating ice cream will start right away, and completion is anticipated by the end of 2025.
It is anticipated that the proposed modifications will affect about 7,500 mostly office-based jobs worldwide. The previously communicated total restructuring costs of approximately 1% of Group turnover are now expected to increase to 1.2% of Group turnover over the next three years. There will be a consultation process for these suggestions.
The productivity programme is anticipated to deliver total cost savings of around 800 million euros over the next three years, more than offsetting estimated operational dis-synergies from the separation of Ice Cream.
The company said it needs to be increasingly focused on a portfolio of superior brands with strong positions that have complementary operating models, while Ice Cream has a very different operating model.
Following the planned separation, Unilever will become a simpler, more focused company, operating four Business Groups across Beauty & Wellbeing, Personal Care, Home Care and Nutrition.
Additionally, Ice Cream will be split off as a stand-alone, globally dominant company with brands that combined generated 7.9 billion euros in revenue in 2023. According to Unilever, its board is certain that a new ownership structure will better enable Ice Cream to realize its full growth potential.
Five of the top ten selling global ice cream brands, including Wall’s, Magnum, and Ben & Jerry’s, are owned by the ice cream industry and are available in both the in-home and out-of-home markets.
It is anticipated that Unilever will have a structurally higher margin following the separation of Ice Cream and the implementation of the productivity program. Unilever hopes to achieve modest margin improvement and mid-single digit underlying sales growth following the split.
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