Unilever announced on Tuesday that it will be spinning off its ice cream unit, which includes popular brands such as Magnum and Ben & Jerry’s, and reducing costs by cutting 7,500 jobs. The plan was received positively by investors, with the company’s shares rising by almost 6% at one point. The spinoff process has already begun and is expected to be completed by the end of 2025.
The ice cream business is relocating to a separate head office in Amsterdam, and the company’s CEO, Hein Schumacher, said he was open to options regarding where it could be listed. The activist investor and board member Nelson Peltz’s fund, as well as Unilever shareholder Aviva, welcomed the plan. Unilever aims to achieve mid-single-digit underlying sales growth and modest margin improvement after the split. The ice cream business accounts for about 16% of Unilever’s global sales and, in some countries, contributes a third or 40%. In addition to the spinoff, Unilever launched a program to save costs of around 800 million euros ($869 million) over the next three years.
The proposed changes would impact around 7,500 jobs globally, mostly office-based, with total restructuring costs anticipated to be around 1.2% of overall turnover during the period. The cuts will affect about 5.9% of Unilever’s workforce of about 128,000 people. Schumacher explained that the restructuring would affect the entire organization, including the head office, corporate centre, business group coordination points, and business units in countries, but did not specify which regions would be affected the most. The move is a significant statement from Schumacher, who became CEO in July. In October, he laid out plans to win back investor confidence by simplifying the business after admitting that Unilever had underperformed in recent years. His predecessor, Alan Jope, was criticized for allowing the group’s brand portfolio to grow to about 400, leaving management distracted from its best performers. The underperformance attracted the attention of billionaire activist investor Peltz, who took a seat on Unilever’s board in 2022 via his Trian investment vehicle and has a track record of shaking up consumer goods companies.
The fund, which owns a 1.45% stake according to LSEG data, told reporters on Tuesday that it “supports the strategic initiatives announced today by Unilever.” Unilever’s shares rose by nearly 6% in early trading and were up 3% by 1100 GMT. “(Ice cream) has been quite a volatile business and has also been dilutive from a margin standpoint, so we think strategically this makes sense,” said Richard Saldanha, portfolio manager at Aviva, which is Unilever’s 17th largest shareholder with a 0.5% stake.