Magnum owner Unilever to spin off ice cream unit, cut 7,500 jobs

BRITISH consumer goods giant Unilever yesterday said it plans to spin off its ice cream unit, home to popular brands such as Magnum and Ben & Jerry’s, into a standalone business as the group announced a new cost-savings program that would impact 7,500 jobs.

Investors cheered the plan, sending Unilever shares up more than 5% in early trading.

The spin-off will begin immediately and is expected to be completed by the end of 2025, the London-listed company said.

The ice cream business is “in the process of moving to a separate head office in Amsterdam” but CEO Hein Schumacher said on a call with journalists that he was “open to options” regarding where it could list.

Unilever aims to deliver mid-single-digit underlying sales growth and modest margin improvement after the split, it said. The ice cream business accounts for about 16% of Unilever’s global sales, and in some countries contributes a third or 40%.

The company also launched a program expected to deliver a total cost savings of around 800 million euros ($869 million) over the next three years. The proposed changes would impact around 7,500 predominantly office-based roles globally, with total restructuring costs now anticipated to be around 1.2% of its turnover during the period.

The cuts will affect about 5.9% of Unilever’s workforce of about 128,000 people.

“We are looking across the organization, so in our head office, corporate center, as well as in business group coordination points, as well as in business units in countries,” Schumacher said.

Unilever’s shares jumped 5.4% in early trading. The stock has dropped 5.8% over the past year.

The move is a big statement from Schumacher, who became CEO in July and in October laid out plans to win back investor confidence by simplifying the business after admitting Unilever had underperformed in recent years. His predecessor Alan Jope was criticised for allowing the group’s brand portfolio to grow to about 400, leaving management distracted from its best performers.

“Great news for shareholders regarding the ice cream division as it has been a drag on the business as a whole for some time, share price should respond accordingly this morning,” Oberon Investments portfolio manager Jack Martin said.

“Obviously sad whenever that many people lose their jobs but (CEO) Hein Schumacher has been under pressure to deliver a better performance for the group since being appointed, so it is not hugely surprising to see changes.”

In October, Schumacher said the company would focus on 30 key brands which account for 70% of its sales, work on improving its gross margin and not undertake any major or transformational acquisitions.

Schumacher told Reuters last month that he would not shy away from streamlining Unilever’s workforce.

“We have a big agenda,” Schumacher said yesterday. “This is going to be a very busy period for the next 18 months or so.”