Unilever will spin off ice cream brands Magnum & Ben and Jerry’s because it will cut jobs
UNILEVER is in the process of divesting its Magnum, Wall’s and Ben & Jerry’s ice cream businesses, taking the ax to 7,500 jobs.
The shake-up comes as new boss Hein Schumacher tries to revive the consumer giant after years of lackluster performance.
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Schumacher yesterday unveiled a ‘growth action plan’ designed to save £680m over three years, largely by shedding six per cent of its 127,000 global workforce.
He also plans to spin Unilever off its ice cream business, which generated £6 billion in sales last year.
Analysts at Barclays believe the ice cream sector – the world’s largest – could be worth £14.5 billion if listed or sold to a private equity firm.
It would be the third major asset dump for Unilever, which sold its Flora spreads business to private equity firm KKR in 2017 and its tea business PG Tips in 2020 to another buyout firm, CVC.
However, none of these sales provided a spark for Unilever’s growth.
The company has been criticized by investors for relying on rising consumer prices, rather than selling more products, to boost profits.
Nelson Peltz, activist investor and father-in-law of Brooklyn Beckham, took over a seat on Unilever’s board last year and is calling for stronger action behind the scenes.
Yesterday his company Trian said it “supports the strategic initiatives” and would continue to work to “enhance long-term value for stakeholders”.
Shares in Unilever, worth £98.3 billion, rose as much as five percent yesterday as the City welcomed the review. But Hermann Soggeberg, chairman of Unilever’s European Works Council, called the move a “disgrace” and “unimaginative”.
He said: “The livelihoods of thousands of people are at stake to boost profits.”
Business analysis
Ice cream should be a simple scoop of innocent joy, but bizarrely, Unilever’s frozen desserts have become political firestorms.
The Ben & Jerry’s brand has been serving its Cookie Dough containers with cute messages about improving the “world” for years.
But two years ago the country announced it would no longer sell its ice cream in the West Bank, saying operating in occupied Palestinian territory was “contrary to its values.”
The boycott of Ben & Jerry’s was considered anti-Semitic and led to backlash from investors. Unilever sold its Ben & Jerry’s license to a local Israeli company, with a messy outcome.
Meanwhile, Unilever has been added to the blacklist of Ukrainian ‘war sponsors’ as it continues to sell Magnum ice cream in Russia.
The company said leaving Russia could lead to factories being seized.
Selling ice cream could prevent future political crises.
1,000 JOBS AT RISK AT TED WOE
THE owner of Ted Baker has called in administrators, putting 1,000 jobs at risk and raising the threat of store closures.
Authentic Brands, which bought Ted Baker for £211 million in 2022, blamed a row with the Dutch company that ran Ted Baker’s 46 stores and online operations in Britain and Europe.
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Authentic’s John McNamara said “damage” had been done during the fashion retailer’s partnership with AARC and too much debt had been built up.
Teneo administrators have been appointed to Ted Baker’s holding company, No Ordinary Designer Label.
Amid rumors of a voluntary settlement from the company, the stores will remain open while Authentic Brands searches for a new operating partner for the Ted Baker brand.
The administration process will give Ted Baker breathing space from creditors, who could otherwise enforce a winding-up order over unpaid debts.
JAPANESE RATE INCREASE
JAPAN has raised interest rates for the first time since 2007, ending its status as the last country in the world with negative interest rates.
The Bank of Japan said it would raise interest rates for the first time in 17 years from minus 0.1 percent to somewhere between zero and 0.1 percent.
Japan has been struggling with deflation since the 1990s, using unconventional negative interest rates to stimulate spending and higher wages and prices.
HOME AND DIY SALES ‘WEAKENED’
SOFA retailer DFS and DIY chain Wickes both signal a weak consumer climate, as consumers cut back on home renovations.
DFS yesterday cut its profit forecast by £10 million and said sales would be £65 million below its targets as demand had “weakened significantly” since the start of the year.
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The warning came as DFS also reported that pre-tax profits had fallen to £900,000 in the six months leading up to Christmas from £30m the year before.
Boss Tim Stacey also warned that profits could be hit by a further £4m due to disruptions in the Red Sea.
Meanwhile, Wickes said sales were down 0.3 per cent and orders for bathroom and kitchen installations were down.
The Confidence Meter suggested consumers were delaying home improvements, but the survey of traders found half had home projects next one three months.
BUILDER CREST Nicholson has said it will build 11 per cent fewer homes this year and revealed £15 million in damage due to defects in previous developments.
Crest said it was setting aside money to correct defects at four locations over the next three years.
£557 million is spent on diversity
THE taxpayer spends £557 million a year on 10,000 public diversity and inclusion jobs, but the Government has little data on the impact these roles have.
A report concluded that the government and private employers are wasting money on equality, diversity and inclusion (EDI) efforts because they fail to measure the impact it has on the workforce.
A report commissioned by Kemi Badenoch, Minister for Business and Trade and Minister for Women and Equality, shows that employers want to ‘do the right thing’, but are clumsily implementing initiatives without evidence-based evidence.
Ms Badenoch said: “We want to ensure employers apply EDI in a way that does not undermine meritocracy and is in line with our equality laws.”