- Unilever to cut 7,500 jobs
- Ice cream business spin-off planned
- Aims for shareholder returns, focus
To “maximize returns for shareholders,” the company intends to divest its extensive ice cream business to realize cost reductions in other areas.
Unilever, the manufacturer of consumer products such as Marmite and Domestos, has disclosed its intention to reduce its workforce by 7,500 employees worldwide.
The proposed layoffs, according to the 12-8,000-person firm based in the United Kingdom, would be primarily attributable to office positions as technology advanced.
It disclosed that its 6,000-person workforce in the United Kingdom would be incorporated into the three-year productivity initiative.
Unilever stated that consultations with those impacted would commence once all positions had been identified in their entirety.
Separately, the company declared its intention to spin off its ice cream division, comprising the Ben & Jerry’s, Magnum, and Cornetto trademarks, by the end of the following year.
It added that alternative strategies would be evaluated to “maximize returns for shareholders.”
Unilever informed investors that it anticipated modest margin improvement and mid-single-digit underlying sales growth following the proposed demerger, which it claimed would create a “simpler and more focused company.”
Unilever projected that its productivity program would yield overall cost reductions of approximately €800 million (£984 million) over the subsequent three years, with restructuring expenses amounting to approximately 1.2% of the company’s revenue during that time frame.
The company’s chief executive, Hein Schumacher, stated, “We have pledged to do fewer tasks more effectively and with greater impact by the Growth Action Plan.
By concentrating our business and resources on global or scalable brands where we can apply our leading innovation, technology, and go-to-market capabilities across complementary operating models, the adjustments we are announcing today will assist us in accelerating that strategy.
“By streamlining our portfolio and increasing productivity, we will be able to unlock the full potential of this business, which will help us achieve our goal of establishing Unilever as a global leader in consumer goods, characterized by robust, sustainable growth and improved profitability.”
We are dedicated to implementing our productivity program in collaboration with employee representatives and with compassion and regard for those affected.
It was the initial significant transition during his tenure after he retired Alan Jope last summer amidst concerns surrounding unprecedented investor returns.
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Regarding the listing location of the ice cream division, Mr. Schumacher stated that the company was “open to options” amidst concerns regarding the City’s competitiveness after Brexit.
Almost 5% more shares were traded at the market open.
Equity analyst at Hargreaves Lansdown Matt Britzman commented on the update: “Shareholders desired action from the new leadership team, and that is precisely what has been provided today.
“In comparison to other product categories, ice cream has always appeared to be an outlier, and its performance has been lacking as of late.
“This move does not come as a complete surprise, but it is something that previous management failed to accomplish.
At this time, Unilever is not an excessively expensive brand, so markets are likely to respond positively to the news, possibly due more to decisive action than anything else.
