Unilever will slim down but not spin off its food division, its chief executive has said, as the London-listed consumer goods group presses ahead with the listing of its ice-cream unit.
Hein Schumacher, who has launched a turnaround plan for the FTSE 100 group, has identified several food brands to “prune”, amounting to about £1bn in sales revenue, he told the Financial Times. Unilever’s food business generated €13.2bn turnover in 2023, of which the largest brands, Knorr and Hellmann’s, accounted for 60 per cent.
“I believe in fewer, bigger, better . . . and that is what we choose to execute on,” he said in an interview ahead of the company’s capital markets day on Friday.
Since taking over as CEO last year, Schumacher has pushed through a rapid and wide-ranging restructure, including the separation of Unilever’s ice-cream division, a cost-cutting drive and hefty job losses.
His comments come as the mayonnaise-to-soap consumer group shelved plans to find a private equity buyer for its ice-cream business — which includes Ben & Jerry’s, with which it is entangled in a legal spat over Unilever’s alleged silencing of the brand’s support for Palestinian refugees.
Schumacher’s pledge not to demerge the food business — whose other brands include Colman’s, Pot Noodle and Marmite — brings clarity to Unilever. A separation and sale of the division was previously explored as a way to fund the acquisition of GSK’s consumer health business but the pharmaceutical group rejected Unilever’s £50bn bid in 2022.
The Dutch chief executive, who joined Unilever from dairy co-operative Royal FrieslandCampina, said he was in the process of deciding where to list the ice-cream business and said he would announce details in the first half of next year. Schumacher added that he had “left the door open” to offers.
“We’re talking to governments, to authorities, but also to stock exchanges, the banks, etc” Schumacher said of the planned initial public offering. “We’re gathering all the facts to make the right call for that business.”
Unilever unveiled a new set of strategic priorities on Friday, including focusing investment in its best-performing emerging markets such as India, Indonesia and Brazil, accelerating growth of its premium brands in the US and taking its high-margin beauty and wellbeing businesses international.
The company also reiterated its medium-term target for mid-single-digit sales growth and volume growth of 2 per cent. The company expects to achieve €800mn in cost savings by the end of next year.
After more than half a decade of lacklustre performance at the company, Schumacher has implemented a “growth action plan” — known internally as “the gap” — which has been well received by investors. The company’s share price has risen 21 per cent this year.
Top-15 shareholder Nick Train said he was impressed by the company’s new management, which he said had “a clear agenda and incentive to create value for shareholders”. He added that while the ice-cream unit was a “fine business”, he saw the logic in the spin-off.
“That is the world number one ice-cream company with the world’s leading brands, and objectively, it’s the sort of asset we might be interested in investing in anyway,” Train said.
At the capital markets day, Schumacher also announced a new company tagline — “Brighten everyday life for all” — a departure from the previous mission statement set out by former CEO Paul Polman, “to make sustainable living commonplace”.
Unilever has drawn criticism from its non-profit partners since it scaled back some of its ESG targets. But Schumacher told the FT the company’s spending on sustainability had increased year-on-year, although he declined to give an exact figure.
“I want to be careful that if I call out the number, that people say, oh, they’re spending so much on sustainability,” he said, pointing out that much of the spend is going towards compliance with regulation.
“I’m not going to look back and be apologetic about changes we made. I’m going to be on the front foot and hold people accountable,” he added.
Additional reporting by Emma Dunkley in London
