Unilever to accelerate Growth
Action Plan through separation of Ice Cream and launch of
productivity programme
- Ice Cream to be separated as
a standalone, world-leading business
- Productivity programme to
drive faster growth and higher margin
- Enhanced medium-term
guidance
London, 19 March
2024. Unilever today announced steps
to accelerate its Growth Action Plan (GAP) through the separation
of Ice Cream and the launch of a major productivity
programme.
The Board believes that Unilever
should be increasingly focused on a portfolio of unmissably
superior brands with strong positions in highly attractive
categories that have complementary operating models. This is where
the company can most effectively apply its innovation, marketing
and go-to-market capabilities. Ice Cream has a very different
operating model, and as a result the Board has decided that the
separation of Ice Cream best serves the future growth of both Ice
Cream and Unilever.
Following separation, Unilever will
become a simpler, more focused company, operating four Business
Groups across Beauty & Wellbeing, Personal Care, Home Care and
Nutrition. These Business Groups have complementary routes to
market, and/or R&D, manufacturing and distribution systems,
across both developed markets and Unilever's extensive emerging
markets footprint.
The separation of Ice Cream will
assist Unilever's management to accelerate the implementation of
its GAP, announced in October 2023, which
is focused on doing fewer things, better, with greater impact to
drive consistent and stronger topline growth, enhance productivity
and simplicity, and step up Unilever's performance culture. In
addition, Unilever will continue to
optimise its portfolio within the four Business Groups towards
higher growth spaces and through brands with global reach or
significant potential to scale.
Separation of Ice Cream
The Unilever Board is confident that
the future growth potential of Ice Cream will be better delivered
under a different ownership structure. Ice Cream has distinct
characteristics compared with Unilever's other operating
businesses. These include a supply chain and point of sale that
support frozen goods, a different channel landscape, more
seasonality, and greater capital intensity.
The separation of Ice Cream will
create a world-leading business, operating in a highly attractive
category, with brands that together delivered turnover of €7.9
billion in 2023. The business has five of the top 10 selling global
ice cream brands including Wall's, Magnum and Ben & Jerry's,
with exposure in both the in-home and out-of-home segments across a
global footprint.
Under new leadership, Ice Cream is
already making significant operational changes at pace that are
expected to drive stronger performance. These include improved
productivity and efficiencies, product rationalisation, and
investment behind significant innovations.
As a standalone, more focused
business, Ice Cream's management team will have operational and
financial flexibility to grow its business, allocate capital and
resources in support of the company's distinct strategy, including
further optimising its manufacturing and logistics network, and
developing wide-reaching, flexible, distribution channels over and
above the changes that are currently under way in the
business.
A demerger of Ice Cream is the most
likely separation route, and in that case we expect the company to
operate with a capital structure in line with comparable listed
companies. Other options for separation will be considered to
maximise returns for shareholders. The costs and operational
dis-synergies relating to the separation of Ice Cream will be
determined by the precise transaction structure chosen.
Separation activity will begin
immediately, with full separation expected by the end of 2025.
Further information will be provided in due course.
Launch of productivity programme
Building on the early momentum of GAP
we have identified additional efficiencies that can now be
accelerated. In addition to the portfolio changes, Unilever intends
to launch 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
our brands and R&D, and support margin improvement over time.
The programme will further reduce complexity and duplication
through technology-led interventions, process standardisation and
operational centres of excellence to drive efficiencies.
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 (up from the around 1% of
Group turnover previously communicated). These proposals will be
subject to consultation.
Enhanced medium-term guidance
The separation of Unilever and Ice
Cream in combination with the productivity programme will ensure
that Unilever's financial and management resources are focused on
its strongest, global or scalable brands. These will have the
capability to drive category expansion and deliver accelerated,
sustainable levels of growth and improved profitability. After
separating Ice Cream and implementing the productivity programme,
Unilever will have a structurally higher margin. Post separation,
Unilever aims to deliver mid-single digit underlying sales growth
and modest margin improvement.
Ian Meakins, Chair of Unilever said:
"The Board is determined to transform Unilever into a
higher-growth, higher-margin business that will deliver
consistently for all stakeholders. Improving our performance and
sharpening our portfolio are key to delivering the improved results
we believe Unilever can achieve.
"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."
Hein Schumacher, CEO of Unilever
said: "Under the Growth Action Plan we have committed to do fewer
things, better, and with greater impact. The changes we are
announcing today will help us accelerate that plan, focusing our
business and our resources on global or scalable brands where we
can apply our leading innovation, technology and go-to-market
capabilities across complementary operating models.
"Simplifying our portfolio and
driving greater productivity will allow us to further unlock the
potential of this business, supporting our ambition to position
Unilever as a world-leading consumer goods company delivering
strong, sustainable growth and enhanced profitability.
"We are committed to carrying out our
productivity programme in consultation with employee
representatives, and with respect and care for those of our people
who are impacted."
ENDS
Enquiries
Media:
Unilever Press Office
press-office.london@unilever.com
Lucila Zambrano
+44 78 2527 3767
Lucila.zambrano@unilever.com
Jonathan Sibun
+44 77 7999 9683
Jonathan.sibun@teneo.com
Investors:
Investor Relations Team
investor.relations@unilever.com
About Unilever
Unilever is one of the world's
leading suppliers of Beauty & Wellbeing, Personal Care, Home
Care, Nutrition and Ice Cream products, with sales in over 190
countries and products used by 3.4 billion people every day. We
have 128,000 employees and generated sales of €59.6 billion in
2023.
For more information about Unilever
and our brands, please visit www.unilever.com.
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editors
Important
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Ice Cream, Unilever's ability to successfully separate Ice Cream
and realise the anticipated benefits of the separation; Unilever's
ability to successfully execute and consummate its productivity
programme in line with expected costs to achieve expected savings;
Ice Cream's ability to succeed as a standalone company; Unilever's
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