Unilever has confirmed its ice-cream business will be listed in Amsterdam, London and New York but the category will still contribute to gross margin this year.
In terms of timing for the demerger, “by the end of 2025” remains the objective of CEO Hein Schumacher, who said today (13 February) that post-the listing spin-off, ice cream will be incorporated in the Netherlands and headquartered in Amsterdam.
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Unilever’s shares are already trading on exchanges in those markets but as Schumacher presented 2024 results today, he told analysts on a call: “When it comes to the three exchanges, [the] country of incorporation is the Netherlands, and that means…Amsterdam or Euronext would be a primary listing location with other listings in London and New York, and that is, of course, to mitigate any technical flow back.”
Jean-Francois van Boxmeer has been appointed as the chair-designate to head up the separated ice-cream business. The former Heineken CEO is currently a non-executive director at the Dutch drinks giant and the chairman of Vodafone.
Ice cream outperformed Unilever’s wider food category (previously reported as nutrition) in terms of both sales growth and volumes in 2024.
Underlying sales growth (USG) for ice cream was 3.7% with volumes up 1.6%, compared to 2.6% and 0.2% for food. All of Unilever’s other category segments also delivered positive results, leading to a group USG of 4.2% and 2.9% for volumes.
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By GlobalDataWithin ice cream, Ben & Jerry’s and Wall’s were the “fastest-growing brands” last year, Unilever said.
New margin base
Unilever has also set a new “base” line for gross margin across the group of 45%, a figure achieved in 2024 after a 280 basis-point increase, adding to the previous year’s 200-point advance. The margin now stands at pre-Covid levels, but not for ice cream.
Schumacher said the 45% margin has been achieved ahead of target, initially set out for the end of 2025 or 2026 under the Growth Action Plan he introduced after becoming CEO in mid-2023.
“That's the level that we feel comfortable with from where to grow,” he said today.
“In the guidance that we have given, ice cream is fully part of the group for 2025. What we've said before is, once ice cream is demerged, it will have a technical effect on margins overall of around 90 basis points. But that is not included in our guidance remarks that we're making today.”
USG for the new financial year will fall within Unilever’s multi-year framework of 3-5% but growth is expected to slow in the early part of 2025 before picking up sequentially, with inflation-linked pricing to play a part.
Pricing was 1.3% across the group last year, with 2.1% in ice cream and 2.4% in Unilever’s food categories. Cocoa had a “very significant impact” on ice cream in terms of overall input-cost pressures, CFO Fernando Fernandez said.
“We expect the market and our growth to improve during the year as prices increase, reflecting higher commodity costs,” Fernandez told analysts. “We expect for the full year a more balanced contribution between volume and price.”
He added: “We anticipate a modest improvement in underlying operating margin for the full year, versus 18.4% in 2024. We expect this improvement to be realised in the second half given the first-half comparator of 19.6%.”
A question was posed today on Unilever reaching its mid-term USG guidance of 4-6% given the pending demerger of ice cream.
“What we've said is, that after the demerger of ice cream, we have guided towards 4-6% growth. That's still what we're shooting for,” Schumacher said.
“We said, look, there is a bit of impact on ice cream, but we also said that by then, the Growth Action Plan would be in place for a considerable amount of time.”
Alongside the initial plan to separate ice cream in March 2024, Schumacher also revealed 7,500 Unilever jobs would go under a productivity programme to cut costs by €800m ($832.1m) through 2027.
Today, the CEO said those savings would be “more than enough to offset the operational dis-synergies from the separation of ice cream”, adding that 4,300 roles were reduced by the end of last year and “close” to €200m in savings realised.
“We are now confident of completing the programme of 7,500 roll reductions by the end of 2025. As a result, from 2026 we expect levels of restructuring spend to be substantially lower,” he said.
“We expect that full productivity programme to end by the end of 2025, which is well ahead of expectations.”
