Unilever is home to the world’s most iconic ice cream brands, from Magnum to Ben & Jerry’s.
In a new review, the company is separating its ice cream business, which last year had sales of 7.9 billion euros ($8.6 billion), into a separate unit to boost its performance despite pressure from activist investors to simplify the business.
London-based Unilever announced that its ice cream unit, which includes five of the world’s 10 best-selling brands, “has a very different operating model.” This prompted the company’s board of directors to separate it from the rest of the company, starting immediately.
The renovation will be completed by the end of 2025, Unilever said in a statement Tuesday.
“As a stand-alone and more focused company, the Ice Cream management team will have operational and financial flexibility to grow its business,” Unilever said. A “split,” which could result in a new publicly traded company, was the most likely path for the future separate unit.
This isn’t the only big change announced by Unilever: the company also plans to cut up to 7,500 “office roles”, as part of a productivity push. Media reported that most of the jobs cut will be in London. The company’s total number of employees is 128,000 globally.
“The separation of Ice Cream and the implementation of the productivity program will help create a simpler, more focused and higher performing Unilever,” Unilever president Ian Maekins said in a statement.
Unilever on the rise his socks
The sweeping changes come within a year of Hein Schumacher taking over as CEO, taking over the top role to revive the company’s lackluster performance. When Schumacher last year laid out his plans for Unilever’s future by focusing on its 30 strongest brands, investors didn’t immediately take them well. However, Schumacher said his strategies were supported by activist investor Nelson Peltz, who joined Unilever’s board in 2022.
Peltz is known for his aggressive turnaround calls and his interest in consumer-focused companies, including Procter & Gamble and Disney. He has been building his stake in Unilever for some years now, and has been among those who have pressured the company to rework its strategy. Peltz’s appointment at the London-based firm was seen as a welcome push for Unilever to revamp its operations.
Soap and Marmite maker Dove has been criticized over the years for its misguided GSK-Pfizer bid in 2022 under former CEO Alan Jope, as well as its failure to lift business margins after the COVID-19 pandemic.
The company’s underlying sales growth rose 7% in 2023, but Unilever reported a revenue decline of 0.8% for that period. When the consumer goods giant announced its results last month, Schumacher said that “competitiveness remains disappointing and overall performance needs to improve.”
Tubs of trouble
Tuesday’s announcement marks a major undertaking for Unilever as it brings its restructuring and simplification plans to fruition. By separating the ice cream business, Unilever could achieve higher margins, the company said.
For their part, some of Unilever’s ice cream brands have not been without problems. Ben & Jerry’s has openly expressed its political position in the past by boycotting Israeli suppliers and distancing itself from Israeli-occupied territories. In January, Ben & Jerry’s called for an “immediate and permanent ceasefire” in Gaza, a position that few consumer brands have openly taken, even as their sales have been hurt by the ongoing war between Israel and Hamas.
Russ Mold of British investment platform AJ Bell said in a note Tuesday that one possible benefit of Unilever’s separation of the ice cream business is that it “could quiet the ‘go wake up and go broke’ noise.” Mold said the approach seems valid even if it doesn’t and could bring the company closer to achieving some of its goals.
“Less than a year into his tenure, CEO Hein Schumacher is certainly making his mark on the group,” said Mold. Schumacher will ultimately be judged on his ability to revive the fortunes of the remaining ‘simplified’ operation. Job cuts and efficiency savings are directly part of the company’s turnaround program, but that doesn’t mean they are without merit.