Unilever to spin-off ice cream unit and cut jobs in cost-saving drive

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Unilever has announced a scoop of changes to its operations, serving up a spinoff of its ice cream unit and a side of job cuts. The company, known for popular brands like Magnum and Ben & Jerry’s, plans to spin off its ice cream business, which accounts for about 16% of its global sales. Investors, delighted by the news, scooped up shares, sending them soaring nearly 6%.

The spinoff, expected to be completed by the end of 2025, will see the ice cream business move to a separate head office in Amsterdam. While Unilever CEO Hein Schumacher mentioned the possibility of listing options, the details are still up in the air. This move was welcomed by activist investor Nelson Peltz’s fund and Unilever shareholder Aviva.

Unilever also unveiled a cost-saving program aimed at trimming around 800 million euros ($869 million) in expenses over the next three years. Unfortunately, this means melting away around 7,500 jobs globally, mostly office-based positions, impacting about 5.9% of its workforce.

Schumacher, who took the helm in July, is making bold moves to simplify Unilever’s business and boost investor confidence after years of underperformance. The company’s portfolio had ballooned to around 400 brands, leading to distractions from its top performers. Peltz, who joined Unilever’s board in 2022, has been a driving force behind these changes.

Unilever’s focus will now be on its 30 key brands, which make up 70% of its sales, as it aims for mid-single-digit sales growth and modest margin improvement post-spinoff. Despite the bitter news of job cuts, investors are hoping these changes will sweeten Unilever’s performance in the long run.

(Source: New York Times | BBC)

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