Unilever to split off its ice cream unit including Ben & Jerry’s
- Consumer goods giant Unilever said Tuesday that it is separating its ice cream unit, which includes Ben & Jerry's and Magnum, as part of a restructuring plan.
- The restructuring will begin immediately and is expected to be completed by the end of 2025.
- Unilever said the restructuring would help in its aims to become "a simpler, more focused company," with four distinct business divisions.
Shares of consumer goods giant Unilever popped on Tuesday after the company announced plans to separate its ice cream unit, which includes Ben & Jerry's and Magnum, as part of a restructuring that will affect 7,500 jobs.
"The proposed changes are expected to impact around 7,500 predominantly office-based roles globally, with total restructuring costs now anticipated to be around 1.2% of Group turnover for the next three years (up from the around 1% of Group turnover previously communicated)," a statement said.
Shares of Unilever were up 5.6% moments after the announcement, before paring gains slightly to trade up 4.1% at 9:20 a.m. London time.
The restructuring will begin immediately and is expected to be completed by the end of 2025, the company said. It is anticipated to deliver total cost savings of about 800 million euros, or $868.3 million.
Unilever said the restructuring would allow it to become "a simpler, more focused company," with four distinct business divisions across beauty and well-being, personal care, home care and nutrition.
The company added that its ice cream division, which generated 7.9 billion euros in revenue in 2023, would perform better as a stand-alone business. The ice cream division accounted for about 13% of Unilever's 59.6 billion euros in total revenue in 2023.
Unilever said plans for the spinoff have not yet been finalized, but that a "demerger is the most likely separation route."
It said that costs of the move would be determined once a final decision had been made.
The move is the most radical yet in a wider overhaul by CEO Hein Schumacher, who took the reins of the company in July 2023.
Unilever has faced growing calls over recent years, including from activist investors, to overhaul its sprawling business amid wide fluctuations in the share price. The stock has lost around 6% from a year ago.
Chris Beckett, head of equity research at Quilter Cheviot, questioned how much of an effect the restructuring would have on the company's wider performance.
"The division in question is noted for its lower growth compared to Unilever's overall performance, suggesting that the demerger might not significantly alter the company's growth trajectory," Beckett said.
"Historically, Unilever's decision to sell its tea business did not lead to a transformative impact on the company's operations or value. It stands to reason that this latest move to split off the ice cream business may follow a similar pattern, offering no substantial metamorphosis."
The Ben & Jerry's brand has also proven a thorn in the company's side, taking an active stance on various political issues.
In 2023, Unilever faced a U.S. lawsuit claiming it misled investors by not immediately disclosing a decision by Ben & Jerry's to stop selling ice cream in Israeli-occupied Palestinian territories, a case that was ultimately dismissed, according to Reuters.
Earlier in the year it also faced backlash over Ben & Jerry's calls for the return of "stolen" U.S. indigenous land.
Terry Smith, managing director of Unilever's 10th largest shareholder Fundsmith, said the restructuring was positive news and described Ben & Jerry's as the "fly in the ointment" of the ice cream business.
"Prior management seem to have managed to buy a company without actually getting control of it," he told Sky News' Ian King on Tuesday.
He added that the ice cream category had particularly struggled in the recent high-inflation environment, as many consumers switched to more cost-conscious supermarket labels.
"Ice cream is a troubled category for them, so I can see why they might do that. It's not had any volume growth for quite a while, particularly in the at-home consumption area," Smith said.