The Unilever group plans to separate its ice cream division as part of its plan to boost its “Growth Action Plan (GAP).” Unilever said that their ice cream division has significantly different characteristics, as compared to their other departments. They also believe that the ice cream business, which generated about 7.6 billion euros last year, would be better off being a standalone venture which allows for cost flexibility and also reduces pressure on Unilever.
The company has been under significant pressure to increase its growth, which could only be described as lacklustre, as CEO Hein Schumacher looks to meet boardroom expectations. In his statement, he said that the company is “committed to do fewer things, better, and with greater impact.” He further remarked “Simplifying our portfolio and driving greater productivity will allow us to further unlock the potential of this business”
The separation means that now Unilever will be left with four departments: nutrition, beauty and well-being, personal care, and home care. Which they plan to prioritise in the coming years, as they focus on providing greater value to stakeholders as the maker of Dove soap looks to increase their margins and profitability.
The demerger also takes care of a separate issue. Ben & Jerry’s, one of the ice cream companies under Unilever's umbrella, saw legal action after it refused to sell its product in the Israel-occupied West Bank, and the ice cream maker also called for a permanent ceasefire. Being a separate business would mean that Unilever does not have to deal with any such legal troubles, and as their boards are already separate, they will not face significant challenges in the demerger. The entire plan is expected to be completed by 2025.
Another part of the plan involves 7500 jobs being cut, as a cost-saving measure. Unilever expects to save up to 800 million euros over the next three years as a result of this move. The jobs that will be impacted will mostly be office-based, but there are no specific departments that have been mentioned. The process will be ‘enabled by investment in technology.’
Job-cuts are viewed as favourable from the market’s perspective, and the company’s share price rose by 3 percent during the morning hours. The separation should lead to higher margins as well, since ice cream, even after contributing a lot to revenue, has significant costs attached to it because of it being in a cold supply chain, and its seasonal nature.
Image credits: Unilever House, Blackfriars by Jim Osley via Wikimedia Commons
Share This Post On
0 comments
Leave a comment
You need to login to leave a comment. Log-in
