LONDON — Unilever, which makes Ben & Jerry’s ice cream, Dove soaps, and Vaseline, announced on Tuesday that it is laying off 7,500 people and spinning off its ice cream division to cut costs and increase earnings.
Unilever, located in London, stated that its ice cream company, which includes Magnum bars, has “distinctive characteristics” from its other brands and would benefit from separate ownership to boost growth. It stated that the separation would be complete by the end of the following year.
Unilever To Cut 7,500 Jobs And Spin Off Its Ice Cream Business, Which Includes Ben & Jerry’s
The British consumer goods company, which employs 128,000 people, has also announced the commencement of a “productivity program” that is projected to eliminate approximately 7,500 office-based jobs globally.
Unilever announced that it will invest in technology to uncover economies and eliminate duplication, which it expects will save 800 million euros ($867 million) over the next three years. The corporation also cut off 1,500 employees in early 2022.
“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,” said Hein Schumacher, CEO, who took over as CEO of Unilever in the summer of 2015.
The company’s shares rose more than 3% in late-morning trading on the London Stock Exchange.
“The share price bounce goes some way in reversing what has been a difficult last year, as investors have fretted over a company with limited high growth prospects and in need of streamlining despite its reputation as a solid defensive play,” said Richard Hunter, head of markets for interactive investor, an online investment service.
Unilever To Cut 7,500 Jobs And Spin Off Its Ice Cream Business, Which Includes Ben & Jerry’s
The company behind Hellman’s mayonnaise, Axe fragrances, and Cif home cleaners said it expects underlying sales growth in the mid-single digits after spinning off its ice cream division.
It witnessed sales volume fall 3.6% in 2022 after raising prices by 13.3% on average across its brands that year. In response, it hiked prices by only 2.8% last year, while sales increased by 1.8%.
Some analysts believe that Unilever could benefit from parting from Ben & Jerry’s, which is known for social activity that has occasionally placed it in conflict with its corporate owner.
“A side benefit of the brand exiting Unilever’s portfolio is that it may quieten the ‘go woke and go broke’ noise, but more broadly, the reasoning for the decision appears pretty sound,” said Russ Mould, investment director at AJ Bell, a financial services company.
He stated that the market did not generally anticipate the ice cream split, even if “political pronouncements from Ben & Jerry’s had provoked a meltdown among some investors.”
Ben & Jerry’s has backed liberal causes such as LGBTQ+ rights, Black Lives Matter, migrants’ rights, and initiatives to combat climate change.
Unilever To Cut 7,500 Jobs And Spin Off Its Ice Cream Business, Which Includes Ben & Jerry’s
The company announced that it would stop selling ice cream in the Palestinian-claimed West Bank and contested east Jerusalem in 2021.
Unilever later announced that it would sell its commercial interest in Ben & Jerry’s in Israel to an Israeli licensee, who would offer the items under Hebrew and Arabic labels. In 2022, a US judge denied Ben & Jerry’s lawsuit to block the proposal.
More recently, after the Israel-Hamas conflict began, Anuradha Mittal, Ben & Jerry’s independent board chair, has advocated for a permanent truce in Gaza.
SOURCE – (AP)
