Unilever Is Axing Jobs and Splitting off Ice Cream Unit

On Tuesday, Unilever revealed plans to split off its ice cream unit, which includes Ben & Jerry’s and Magnum. This move is part of a wider restructuring effort that will affect 7,500 jobs, according to a CNBC report. Following this announcement, the company’s shares spiked over 5%.

A statement from the consumer goods giant said, “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).”

Unilever said the restructuring, which is set to be actioned immediately, is planned to conclude by the end of 2025. This strategy is predicted to generate a total sum of around 800 million euros ($868.3 million) in overall cost savings.

According to BBC News, the chairman of Unilever, Ian Meakins, said, “The separation of ice cream and the delivery of the productivity programme will help create a simpler, more focused, and higher performing Unilever.”

The company said this restructuring will give room for the company to transition to “a simpler, more focused company,” with four clear business divisions across beauty and wellbeing, personal care, home care, and nutrition.

Additionally, the company said that its ice cream division, which turned over 7.9 billion euros in revenue in 2023, is better positioned to thrive as an independent business. Meakin said, “It will also create a world-leading ice cream business, with strong growth prospects and an exciting future as a standalone business.” 

Unilever indicated that even though plans for the spinoff have not been fully affirmed, a demerger is the most probable separation method. The company said the costs linked with this transition would be figured out once the plans are finalized.

This step represents the most significant move in a wider restructuring led by CEO Hein Schumacher, who stepped into the leadership position at Unilever in July 2023.

In recent years, Unilever has faced increasing pressure from active investors to revamp its extensive business due to fluctuations in the share price. The stock has seen a decline of approximately 6% compared to a year ago.

Matt Britzman at Hargreaves Lansdown said this transition was “not a huge shock” given the underperformance of the ice cream unit. He said, “It doesn’t sound like there’s a buyer lined up so it looks like a demerger will be the choice. Investors can then decide whether they want to keep the new ice cream business or sell into the market.”