Unilever, a multinational consumer goods company known for brands such as Marmite, Dove, and Ben & Jerry’s, has unveiled a strategy including job cuts, the spin-off of its ice cream division, and cost-saving initiatives projected to reach €800 million (£684 million) over the next three years.
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The company is set to reduce its workforce by approximately 7,500 jobs worldwide, representing over 5% of its total global workforce of 128,000 employees.
The restructuring plans to streamline operations and enhance productivity, with most of the affected positions expected to be office-based roles. The company plans to invest in artificial intelligence (AI) and IT infrastructure to drive efficiency.
The company has announced plans to separate its ice cream business, which includes brands such as Wall’s, Magnum, and Ben & Jerry’s, into a standalone entity.
With annual revenues of €7.9 billion and accounting for 16% of group sales, the ice cream division is for independent growth.
Options for the separation include a demerger, potentially leading to a separate stock market listing. Unilever plans to complete the spin-off by the end of 2025.
The company has outlined a productivity program aimed at delivering cost savings of around €800 million over the next three years.
The initiative involves restructuring, leveraging technology, and optimizing operational efficiencies. The company intends to reinvest these savings into driving growth and innovation across its core business divisions.
Following the separation of its ice cream division, Unilever will refocus on four key business areas, beauty and wellbeing, personal care, home care, and nutrition.
By streamlining its portfolio, the company plans to achieve mid-single-digit underlying sales growth and modest margin improvement, positioning itself as a simpler and more focused organization.
The company’s announcement has garnered positive market reaction with shares rising over 5% in early trading.
Investors view the initiatives as decisive steps toward driving long-term value creation and enhancing shareholder returns.
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The company’s commitment to prudent cost management and realignment goes with investor expectations for growth.
The company’s Chief Executive Officer, Hein Schumacher, addressed the company’s commitment to executing its growth action plan and delivering greater impact through focused operations.
Chairman Ian Meakins underlined the rationale behind the ice cream division spin-off, addressing the potential for both Unilever and the standalone ice cream business to thrive independently.
Unilever intends to spin off its ice cream business, encompassing brands such as Wall’s, Magnum, and Ben & Jerry’s.
With annual revenues totaling €7.9 billion, the ice cream division will undergo a separation process, likely resulting in the creation of a standalone entity by the end of 2025.
Unilever cites the distinct operational challenges inherent in the ice cream business, including seasonality and specialized supply chain requirements.
The decision to separate the ice cream division shows a strategic realignment aimed at enhancing agility, responsiveness, and market competitiveness.
By divesting non-core assets, Unilever seeks to concentrate resources on high-growth segments and maximize shareholder value in a consumer market.
The company’s announcement has a positive market response with shares surging by over 5% following the news.
The restructuring initiative is expected to drive mid-single-digit underlying sales growth and deliver incremental margin improvement over the medium term.
The company anticipates restructuring costs amounting to approximately 1.2% of group sales during the implementation period.
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