On Tuesday, Unilever (LON:ULVR) announced plans to separate its ice cream division, which includes household names such as "Magnum" and "Ben & Jerry's", into a standalone entity. This strategic pivot is part of a broader cost-saving initiative that will also see the global consumer goods conglomerate reduce its workforce by 7,500 positions.
The decision to hive off the ice cream segment comes as Unilever seeks to hone its focus on core brands and operations. The company has stated that the separation process will kick off immediately, with completion targeted by the end of 2025. Through this realignment, Unilever aims to achieve mid-single-digit underlying sales growth and a modest improvement in profit margins.
Simultaneously, Unilever has embarked on a significant cost-reduction program to save approximately 800 million euros ($869 million) over the next three years. This restructuring will predominantly affect office-based roles, impacting around 5.9% of its global workforce of about 128,000 employees. The company anticipates that these changes will incur total restructuring costs equivalent to about 1.2% of its turnover during this period.
Investors met the news enthusiastically, propelling Unilever's shares up by 5.4% in early trading despite a 5.8% decline over the past year. This restructuring reflects the new strategic direction under CEO Hein Schumacher, who has been under pressure to revitalize the company's performance. Schumacher's strategy concentrates on 30 key brands, constituting 70% of Unilever's sales, thereby improving gross margin and steering clear of major acquisitions.
While the job cuts are a difficult pill to swallow, they underscore Unilever's commitment to a leaner, more focused operational model, promising a new era of growth and efficiency for the storied brand.
