Unilever shares jumped on Tuesday after the consumer staples company announced plans to emerge its Ice Cream business and cut 7,500 office-based roles globally.
Investors have long awaited a strategic action plan to boost the company’s profitability and that was delivered today in the form of the acceleration of its Growth Action Plan (GAP) announced last designed to streamline the business and reduce costs.
Unilever shares were 3% higher at the time of writing.
There are no concrete plans for the demerger which is expected to be completed by the end of 2025, however, a separate listing is a likley option.
After the demerging of the Ice Cream business, Unilver will operate four business units; Beauty & Wellbeing, Personal Care, Home Care and Nutrition.
“When the market was speculating about steps Unilever might take to revive its fortunes, a spin-off of its ice cream division had not been that widely discussed – even if political pronouncements from Ben & Jerry’s had provoked a meltdown among some investors,” said Russ Mould, investment director at AJ Bell.
“A side benefit of the brand exiting Unilever’s portfolio is it might quieten the ‘go woke and go broke’ noise but more widely the reasoning for the decision looks pretty sound.
“It costs the company more to sustain the ice cream business, there is a different supply chain because it is dealing with frozen goods and it’s more seasonal than the company’s other roster of brands.
“A demerger and separate stock market listing for the ice cream arm is seen by Unilever as the most likely outcome with a fairly tight deadline of the end of next year set by the company. Less than a year into his tenure, CEO Hein Schumacher is certainly making his mark on the group.”
The slashing of the payroll to the tune of 7,500 will be completed over a three year period. The restructuring is thought to cost 1.2% of global turnover over the period.