LONDON: Unilever has announced the initiation of a significant restructuring process, and is set to separate its Ice Cream division and launch an extensive productivity programme as part of its Growth Action Plan (GAP).
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.
The separation of Ice Cream will create a world-leading business, operating in a highly attractive category, with brands that together delivered turnover of €7.9 billion in 2023. The business has five of the top 10 selling global ice cream brands including Wall’s, Magnum and Ben & Jerry’s, with exposure in both the in-home and out-of-home segments across a global footprint.
Under new leadership, Ice Cream is already making significant operational changes at pace that are expected to drive stronger performance. These include improved productivity and efficiencies, product rationalisation, and investment behind significant innovations.
As a standalone, more focused business, Ice Cream’s management team will have operational and financial flexibility to grow its business, allocate capital and resources in support of the company’s distinct strategy, including further optimising its manufacturing and logistics network, and developing wide-reaching, flexible, distribution channels over and above the changes that are currently under way in the business.
A demerger of Ice Cream is the most likely separation route, and in that case we expect the company to operate with a capital structure in line with comparable listed companies. Other options for separation will be considered to maximise returns for shareholders. The costs and operational dis-synergies relating to the separation of Ice Cream will be determined by the precise transaction structure chosen.
Separation activity will begin immediately, with full separation expected by the end of 2025.
Productivity Programme Targets €800 Million Savings
Complementing the separation, Unilever is launching a comprehensive productivity programme aimed at achieving cost savings of approximately €800 million over three years. This initiative will focus on creating a leaner, more accountable organisation, with investments in technology to drive efficiencies. The programme is designed to offset the operational dis-synergies from the Ice Cream division’s separation while providing additional savings for growth investments and margin improvements.
Restructuring to Affect 7,500 Roles, Enhance Margins
The restructuring is anticipated to impact around 7,500 office-based roles globally, with total costs expected to be about 1.2% of the group’s turnover for the next three years. Unilever’s Chair, Ian Meakins, expressed the board’s commitment to transforming the company into a higher-growth, higher-margin business. CEO Hein Schumacher also highlighted the focus on fewer, impactful activities under the GAP, aiming to position Unilever as a leading consumer goods company with strong, sustainable growth.
Unilever to spin off ice cream business, cut 7,500 jobs for cost savings
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