Unilever's Ice Cream Spin-off: A Sweet Deal for Investors

Unilever, the multinational consumer goods company, has announced its plans to list its ice cream business in Amsterdam, London, and New York. This strategic move is part of the company's Growth Action Plan (GAP) and is expected to create a world-leading ice cream business with a capital structure in line with comparable listed companies. The ice cream business, which includes brands like Wall's, Magnum, and Ben & Jerry's, generated turnover of €7.9 billion in 2023 and has five of the top 10 selling global ice cream brands.



The separation of the ice cream business is expected to create a more focused company, operating four Business Groups: Beauty & Wellbeing, Personal Care, Home Care, and Nutrition. These groups have complementary routes to market, R&D, manufacturing, and distribution systems, allowing Unilever to apply its innovation, marketing, and go-to-market capabilities more effectively. The ice cream business, with its distinct supply chain and point of sale that supports frozen goods, more seasonality, and greater capital intensity, will have operational and financial flexibility to grow its business and allocate capital and resources in support of its distinct strategy.



In addition to the ice cream spin-off, Unilever has launched a comprehensive productivity programme, driving focus and faster growth through a leaner and more accountable organisation, enabled by investment in technology. The productivity programme is anticipated to deliver total cost savings of around €800 million over the next three years, more than offsetting estimated operational dis-synergies from the separation of Ice Cream. Incremental net savings from the programme beyond dis-synergies will provide flexibility for accelerated growth investments behind Unilever's brands and R&D, and support margin improvement over time.

The proposed changes are expected to impact around 7,500 predominantly office-based roles globally, with total restructuring costs now anticipated to be around 1.2% of Group turnover for the next three years. These proposals will be subject to consultation.

The separation of Unilever and Ice Cream in combination with the productivity programme will ensure that Unilever becomes a higher-growth, higher-margin business. Once both actions are complete, underlying sales growth is expected in the mid-single-digit range (current guidance 3% to 5%), and margins are also expected to improve.



In conclusion, Unilever's decision to list its ice cream business in Amsterdam, London, and New York, along with its comprehensive productivity programme, is a strategic move that aligns with the company's long-term vision for growth and margin improvement. By creating a more focused company and driving operational efficiencies, Unilever is positioning itself to become a higher-growth, higher-margin business, with a strong portfolio of global ice cream brands. Investors should take note of this sweet deal and consider adding Unilever to their watchlist.