Unilever To Separate Ice Cream Unit, To Cut 7,500 Jobs; Stock Up

(RTTNews) - Shares of Unilever Plc were gaining around 3 percent in the morning trading on London Stock Exchange as well as in pre-market activity on the NYSE after the consumer goods major announced Tuesday its plans to seperate Ice Cream division, and to launch a major productivity programme to drive faster growth and higher margin. The proposed changes would impact around 7,500 predominantly office-based roles globally.

Ice Cream will be separated as a standalone, world-leading business. The proposed separation activity of Ice Cream will begin immediately, with full separation expected by the end of 2025.

It is expected that after separating Ice Cream and implementing the productivity programme, Unilever will have a structurally higher margin. Following the separation, Unilever aims to deliver mid-single digit underlying sales growth and modest margin improvement.

Ian Meakins, Chair of Unilever said, "The Board is determined to transform Unilever into a higher-growth, higher-margin business that will deliver consistently for all stakeholders. … The separation of Ice Cream and the delivery of the productivity programme will help create a simpler, more focused, and higher performing Unilever. It will also create a world-leading ice cream business, with strong growth prospects and an exciting future as a standalone business."

The steps are part of its decision to accelerate its Growth Action Plan. 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.

According to Unilever, the future growth potential of Ice Cream will be better delivered under a different ownership structure.

The Ice Cream 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. Ice Cream brands together delivered turnover of 7.9 billion euros in 2023.

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.

Further, the company said 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 total restructuring costs from the proposed changes are now anticipated to be around 1.2 percent of Group turnover for the next three years, up from the around 1 percent of Group turnover previously communicated. These proposals will be subject to consultation.

In London, Unilever shares were trading at 3,934.81 pence, up 3.24 percent. In pre-market activity on the NYSE, the shares were at $49.97, up 3 percent.