HUL parent firm Unilever to separate ice cream unit that makes Magnum, sack 7,500 employees

Hindustan Unilever’s parent firm Unilever plans to separate its ice cream unit into a standalone business under a new cost-savings scheme that will see nearly 7,500 jobs gone. The move is expected to be completed by the end of next year, the company said.

The Magnum ice cream maker said a range of options will be considered for the separation, with a demerger that creates a new listed business the most likely option. Unilever, which also owns Hellmann’s mayonnaise and Domestos cleaners, said the ice cream division had sales of $8.6 billion in 2023.

The move is part of a broader restructuring to jumpstart growth. Unilever said the job cuts, which will affect mainly office-based roles, are part of a plan to achieve €800 million in cost savings over the next three years.

The restructuring will leave the company focused on four businesses: beauty and wellbeing, personal care, home care and nutrition. Rival Nestle SA previously separated its ice cream business by setting up a joint venture with private equity firm PAI Partners.

Separating the ice cream unit will remove a headache for Unilever, which has had to deal with several controversies over political stances taken by Ben & Jerry’s.

In December 2022, Unilever settled a court battle with Ben & Jerry’s independent board after the brand objected to its products being sold in the Israeli-occupied West Bank.

In a separate incident earlier that year, Unilever criticized Ben & Jerry’s after it said in a social media post that US President Joe Biden was fanning “the flames of war” by sending troops to Europe, weeks before Russia invaded Ukraine.

“We believe a separation of ice cream makes sense given its slower profile and lack of cost synergies due to its cold supply chain,” said James Edwardes Jones, an analyst at RBC Capital Markets.

“Unilever’s plan to separate out its Ice Cream arm for probable divestiture makes sense, removing seasonality from growth and a low-margin drag. Yet the end-2025 separation date suggests there’s a long and bumpy road ahead, combined with disruption from a new productivity program.”