Consumer goods goliath Unilever (ULVR) is pushing ahead with the IPO (initial public offering) of its ice cream unit and plans to slim down rather than spin off its food division, as CEO Hein Schumacher’s turnaround strategy continues to gain traction.

At the FTSE 100 giant’s recent investor event (22 November), the Hellmann’s mayonnaise-to-Dove soap maker set out its strategic priorities under Schumacher’s ‘Growth Action Plan 2030’ to deliver ‘consistent, higher performance with market-making, unmissably superior brands’. 

Unilever has aborted plans to find a private equity buyer for the ice cream business, home to some of the world’s best-selling ice cream brands including Ben & Jerry’s, Magnum and Walls. To recap, Unilever believes the unit’s future growth potential will be better delivered under a different ownership structure, since it has distinct characteristics compared with Unilever’s other businesses.

At the investor day, Unilever confirmed that it is on track to separate ice cream, and deliver its ’comprehensive’ €800 million productivity programme, by the end of 2025. Following the separation, Unilever will be focused on four business groups: Beauty & Wellbeing, Personal Care, Home Care and Foods, which will be driven by 30 Power Brands and operate across 24 markets representing the thick end of 85% of Unilever’s turnover.

Under Schumacher’s Growth Action Plan, the Persil-to-Sunsilk maker will focus on its so-called ’Power Brands’ and the key markets where it can drive the biggest returns. Priorities will include doubling-down in India, growing ‘select’ emerging market ‘powerhouses’ as well as accelerating and internationalising the growth of its prestige and wellbeing products. Schumacher also informed the Financial Times that instead of spinning off the division, Unilever will slim down the food arm through disposals and that he has identified several brands to ‘prune’.

There was also relief as Unilever reiterated its medium-term guidance. Post the restructuring of the business, it aims to deliver mid-single digit underlying sales growth, supported by volume growth of ‘at least’ 2%. Investors can also expect ‘modest’ operating margin improvement as the company expands its gross margins and benefits from cost savings and productivity improvements.

Schumacher insisted management is ‘excited about the opportunities to drive Unilever’s future growth, as we continue to progress Unilever’s transformation and unlock the company’s full potential.’ On 24 October, the company reported third quarter organic sales growth of 4.5%, ahead of the 4.1% consensus estimate with volume growth increasing to 3.6%. 

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