Unilever (UL) is Melting Off its Ice Cream Business Leaving Brands Ben & Jerry’s and Magnum Out Cold, Cutting 7,500 Jobs

Unilever (UL) announced on Tuesday its decision to initiate a spinoff of its ice cream unit, which houses beloved brands like Magnum and Ben & Jerry’s, alongside a comprehensive cost-saving program involving a reduction of 7,500 jobs.

Investors responded positively to the plan, propelling Unilever’s shares up by nearly 6% at one point. The spinoff process has already commenced and is projected to conclude by the end of 2025, as stated by London-listed Unilever. While the ice cream business is transitioning to a separate headquarters in Amsterdam, CEO Hein Schumacher indicated a willingness to explore various listing options.

This strategic move garnered support from activist investor Nelson Peltz’s fund and Unilever shareholder Aviva. Following the split, Unilever aims to achieve mid-single-digit underlying sales growth and moderate margin improvement. The ice cream segment presently contributes approximately 16% of Unilever’s global sales, with substantial contributions in certain regions.

Simultaneously, Unilever launched an ambitious cost-saving program targeting approximately 800 million euros ($869 million) in savings over the next three years. This initiative is expected to affect around 7,500 jobs worldwide, primarily office-based roles, with restructuring costs estimated to represent about 1.2% of overall turnover during this period.

CEO Hein Schumacher emphasized that the restructuring would be comprehensive, spanning across the organization, although specifics regarding impacted regions were not disclosed. This strategic overhaul reflects Schumacher’s commitment to revitalizing Unilever’s performance following a period of underperformance in recent years.

Unilever’s shares surged nearly 6% in early trading, with market sentiment largely positive regarding the divestiture of its ice cream division. Analysts perceive this move as strategically sound, considering the segment’s historical volatility and margin dilution.

In October, Schumacher outlined Unilever’s strategic focus on 30 key brands, representing 70% of sales, and emphasized improving gross margins while abstaining from major acquisitions. He reiterated a commitment to workforce streamlining, acknowledging the forthcoming challenges and opportunities in the company’s transformation journey.