Unilever to spin off ice cream unit, cut 7,500 jobs for cost savings
Ben & Jerry’s, a brand of Unilever, is seen on display in a store in Manhattan, New York City, U.S., March 24, 2022. REUTERS/Andrew Kelly/files
Unilever said on Tuesday it would spin off its ice cream unit, home to popular brands such as Magnum and Ben & Jerry’s, into a standalone business and cut 7,500 jobs in a new cost-savings program, sending shares surging in early trading.
The spinoff will begin immediately and is expected to complete by the end of 2025, the London-listed consumer goods group said in a statement.
Unilever aims to deliver mid-single-digit underlying sales growth and modest margin improvement after the split, it said.
The company also launched a program to save costs of around 800 million euros ($869 million) over the next three years. The proposed changes would impact around 7,500 jobs globally, mostly office-based, with total restructuring costs anticipated to be around 1.2 percent of its turnover during the period.
The cuts will affect about 5.9 percent of Unilever’s workforce of about 128,000 people.
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“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.
Shares jumped 5.4 percent in early trading. The stock has dropped 5.8 percent over the past year.
“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.”
Simplifying the business
Schumacher in October laid out plans to simplify the business after admitting Unilever had underperformed in recent years. His predecessor, Alan Jope, was criticized for allowing the group’s brand portfolio to grow to about 400, leaving management distracted from its best performers.
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After taking the role in July, Schumacher had said that 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 are committed to carrying out our productivity program in consultation with employee representatives, and with respect and care for those of our people who are impacted,” Schumacher said on Tuesday.
($1 = 0.9206 euros)
