Magnum-ice cream manufacturer Unilever will be laying off 7,500 employees globally as part of its productivity programme and separating its ice cream business from core business as it aims to drive faster growth and higher margin, the FMCG (fast-moving consumer goods) company says in a statement on March 19. The London-listed company expects full separation of the ice cream business by the end of 2025.
"The Board believes that Unilever should be increasingly focused on a portfolio of unmissably superior brands with strong positions in highly attractive categories that have complementary operating models. This is where the company can most effectively apply its innovation, marketing and go-to-market capabilities. Ice Cream has a very different operating model, and as a result, the Board has decided that the separation of Ice Cream best serves the future growth of both Ice Cream and Unilever," says the company.
"The separation of ice cream will create a world-leading business, operating in a highly attractive category, with brands that together delivered a 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," it adds.
Unilever expects the ice cream business to operate with a capital structure in line with comparable listed companies. According to Unilever, 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, says the company.
After the separation of the ice cream business, the London-listed company will operate under four business groups across beauty and well-being, personal care, home care and nutrition. "These Business Groups have complementary routes to market, and/or R&D, manufacturing and distribution systems, across both developed markets and Unilever’s extensive emerging markets footprint," says the company.
Meanwhile, the company has launched a productivity programme, as part of its growth action plan (GAP) launched in October last year. The programme is expected to impact around 7,500 predominantly office-based roles globally. As per the company, the productivity programme is anticipated to deliver total cost savings of around 800 million euros over the next three years.
"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). These proposals will be subject to consultation," says Unilever.
With the productivity programme and separation of the ice cream business, Unilever aims to have a structurally higher-margin, mid-single-digit underlying sales growth and modest margin improvement.
"The Board is determined to transform Unilever into a higher-growth, higher-margin business that will deliver consistently for all stakeholders. Improving our performance and sharpening our portfolio are key to delivering the improved results we believe Unilever can achieve," says Ian Meakins, chairman, Unilever.
