Magnum Classic

Magnum i is one of the top 10 ice cream brands in the world

Unilever has unveiled plans to spin out its €7bn (£6bn) global ice cream business in an acceleration of new boss Hein Schumacher’s strategy to turn around the group’s performance.

The separation is already underway and expected to complete by the end of 2025, with a demerger and stock market listing the preferred option for the division containing five of the top 10 global ice cream brands, including Magnum, Ben & Jerry’s and Cornetto.

Unilever is “open to options” on where the separated business could float, with London, Amsterdam and New York set to fight it out for ths listing.

However, Schumacher, who joined as CEO last year to shake up the group, did not rule out a full disposal to an external trade or PE buyer.

Barclays estimated the ice cream business, which has double the market share of its nearest rival at 20%, could be worth €17bn (£14.6bn).

Unilever said the division would be better as a standalone business, cutting supply chain complexity for the rump of the group as it exits frozen, and leaving it less exposed to seasonal fluctuations in demand.

Ice cream accounts for 13% of Unilever’s overall €60bn sales, but it is less profitable than the wider business, with an adjusted operating margin of 10.8% vs 16.7% for the group. Volumes at the division fell by 6% in 2023 as consumers traded down to own label.

Hiving off ice cream would leave Unilever with four businesses covering beauty and wellbeing, personal care, home care and nutrition.

As part of the plan, Unilever also announced a ramping up of cost-cutting initiatives to offset the spin-off, with the programme expected to save €800m over the next three years. The proposed changes will lead to 7,500 jobs being slashed, with the majority being office-based roles. Unilever did not specify how many of the 6,000 UK roles would be affected.

Barclays analyst Warren Ackerman called the plan “a bold step forward by the new management team”.

Unilever chairman Ian Meakins said: “The separation of ice cream and the delivery of the productivity programme will help create a simpler, more focused, and higher-performing Unilever. It will also create a world-leading ice cream business, with strong growth prospects and an exciting future as a standalone business.”