Unilever to spin off Ben & Jerry’s and cut 7,500 jobs

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By journalsofus.com

Consumer goods giant Unilever said on Tuesday it will cut 7,500 jobs and close its ice cream unit, which also includes Ben & Jerry’s, to reduce costs and simplify its portfolio of brands.

The move will create “a simpler, more focused and higher-performing Unilever,” Ian Meekins, chairman of the London-based company, said in a statement. The group’s ice cream unit generated sales of 7.9 billion euros ($8.6 billion) last year, or about 13 percent of the group’s total sales.

The division is home to Ben & Jerry’s, which Unilever acquired in 2000 along with brands such as Cornetto, Magnum, Talenti and Wall’s. The spinoff is expected to be completed by the end of 2025.

Hein Schumacher, who took over as chief executive of Unilever in July, announced plans late last year to “boost growth and unlock potential” by focusing more on just 30 of the group’s hundreds of brands. .

On Tuesday, he said the job cuts and the ice cream spinoff would “accelerate” the plan, saving about $870 million in costs over the next three years. The layoffs, “primarily office-based roles” worldwide, amount to about 6 percent of Unilever’s workforce.

In early 2022, Nelson Peltz, one of Wall Street’s most prominent activist investors, began building a stake in Unilever. Mr. Peltz, known for pushing companies to simplify their corporate structures, got a seat on Unilever’s board later that year, where he remains.

Following the proposed spinoff, Unilever’s remaining units will include health and beauty brands such as Dove soap, consumer goods such as surf detergent and food brands including Hellmann’s mayonnaise.

Unilever rival Nestlé transferred several of its European ice cream brands to a joint venture with a private equity firm in 2016 and sold its US brands, including Dreyer and Häagen-Dazs, to the venture in 2019.

Unilever has struggled in recent years, with falling sales volumes hampering revenue growth due to steep price increases. Fed up with inflation, consumers are turning to cheaper brands in many of Unilever’s biggest categories, particularly less essential products like ice cream.

The ice cream division suffered the highest input-cost inflation in Unilever’s portfolio last year, the company said in an earnings report last month. The company said it passed some of those costs on to consumers, prompting them to buy less or switch to cheaper brands, leading to a “disappointing year with declining market share and profitability”.

“The company has sought to accelerate cost-cutting in pursuit of accelerated growth for at least a decade,” Bernstein analysts wrote in a research note. “The plan remains that we will try harder to execute the same plan, or hope more from the experience,” he said. Unilever shares rose 3 percent on Tuesday, but have remained roughly flat over the past year.

Ben & Jerry’s, which has been run by an independent board since its acquisition by Unilever, has not always sat comfortably in the portfolio of a staid multinational corporation. The founder of the Vermont-based brand is outspoken on intense social and political issues; In 2021, they said they would stop sales in Israeli-occupied territories.

This led some US pension funds to divest from Unilever and a shareholder lawsuit. Ben & Jerry’s sued Unilever in 2022 to prevent it from selling distribution rights in Israel to a licensee. Unilever eventually sold the rights to its old local partner, which continues to sell the ice cream with slightly different branding.

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