REG - Unilever PLC - Unilever to accelerate Growth Action Plan

UnileverAnnouncement

19/03/2024 07:00

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RNS Number : 3258H  Unilever PLC  19 March 2024

Press Office

Unilever PLC, 100 Victoria Embankment, London, EC4Y 0DY

Email: press-office.london@unilever.com    Web: www.unilever.com
(http://www.unilever.com)

Unilever to accelerate Growth Action Plan through separation of Ice Cream and
launch of productivity programme

 

-       Ice Cream to be separated as a standalone, world-leading
business

-       Productivity programme to drive faster growth and higher margin

-       Enhanced medium-term guidance

 

London, 19 March 2024. Unilever today announced steps to accelerate its Growth
Action Plan (GAP) through the separation of Ice Cream and the launch of a
major productivity programme.

 

The Board believes that Unilever should be increasingly focused on a portfolio
of unmissably superior brands with strong positions in highly attractive
categories that have complementary operating models. This is where the company
can most effectively apply its innovation, marketing and go-to-market
capabilities. Ice Cream has a very different operating model, and as a result
the Board has decided that the separation of Ice Cream best serves the future
growth of both Ice Cream and Unilever.

 

Following separation, Unilever will become a simpler, more focused company,
operating four Business Groups across Beauty & Wellbeing, Personal Care,
Home Care and Nutrition. These Business Groups have complementary routes to
market, and/or R&D, manufacturing and distribution systems, across both
developed markets and Unilever's extensive emerging markets footprint.

 

The separation of Ice Cream will assist Unilever's management to accelerate
the implementation of its GAP, announced in October 2023, which is focused on
doing fewer things, better, with greater impact to drive consistent and
stronger topline growth, enhance productivity and simplicity, and step up
Unilever's performance culture. In addition, Unilever will continue to
optimise its portfolio within the four Business Groups towards higher growth
spaces and through brands with global reach or significant potential to scale.

 

Separation of Ice Cream

 

The Unilever Board is confident that the future growth potential of Ice Cream
will be better delivered under a different ownership structure. Ice Cream has
distinct characteristics compared with Unilever's other operating businesses.
These include a supply chain and point of sale that support frozen goods, a
different channel landscape, more seasonality, and greater capital intensity.

 

The separation of Ice Cream will create a world-leading business, operating in
a highly attractive category, with brands that together delivered turnover of
€7.9 billion in 2023. The business has five of the top 10 selling global ice
cream brands including Wall's, Magnum and Ben & Jerry's, with exposure in
both the in-home and out-of-home segments across a global footprint.

 

Under new leadership, Ice Cream is already making significant operational
changes at pace that are expected to drive stronger performance. These include
improved productivity and efficiencies, product rationalisation, and
investment behind significant innovations.

 

As a standalone, more focused business, Ice Cream's management team will have
operational and financial flexibility to grow its business, allocate capital
and resources in support of the company's distinct strategy, including further
optimising its manufacturing and logistics network, and developing
wide-reaching, flexible, distribution channels over and above the changes that
are currently under way in the business.

 

A demerger of Ice Cream is the most likely separation route, and in that case
we expect the company to operate with a capital structure in line with
comparable listed companies. Other options for separation will be considered
to maximise returns for shareholders. The costs and operational dis-synergies
relating to the separation of Ice Cream will be determined by the precise
transaction structure chosen.

 

Separation activity will begin immediately, with full separation expected by
the end of 2025. Further information will be provided in due course.

 

Launch of productivity programme

 

Building on the early momentum of GAP we have identified additional
efficiencies that can now be accelerated. In addition to the portfolio
changes, Unilever intends to launch a comprehensive productivity programme,
driving focus and faster growth through a leaner and more accountable
organisation, enabled by investment in technology.

 

The productivity programme is anticipated to deliver total cost savings of
around €800 million over the next three years, more than offsetting
estimated operational dis-synergies from the separation of Ice Cream.
Incremental net savings from the programme beyond dis-synergies will provide
flexibility for accelerated growth investments behind our brands and R&D,
and support margin improvement over time. The programme will further reduce
complexity and duplication through technology-led interventions, process
standardisation and operational centres of excellence to drive efficiencies.

 

The proposed changes are expected to impact around 7,500 predominantly
office-based roles globally, with total restructuring costs now anticipated to
be around 1.2% of Group turnover for the next three years (up from the around
1% of Group turnover previously communicated). These proposals will be subject
to consultation.

 

Enhanced medium-term guidance

 

The separation of Unilever and Ice Cream in combination with the productivity
programme will ensure that Unilever's financial and management resources are
focused on its strongest, global or scalable brands. These will have the
capability to drive category expansion and deliver accelerated, sustainable
levels of growth and improved profitability. After separating Ice Cream and
implementing the productivity programme, Unilever will have a structurally
higher margin. Post separation, Unilever aims to deliver mid-single digit
underlying sales growth and modest margin improvement.

 

Ian Meakins, Chair of Unilever said: "The Board is determined to transform
Unilever into a higher-growth, higher-margin business that will deliver
consistently for all stakeholders. Improving our performance and sharpening
our portfolio are key to delivering the improved results we believe Unilever
can achieve.

 

"The separation of Ice Cream and the delivery of the productivity programme
will help create a simpler, more focused, and higher performing Unilever. It
will also create a world-leading ice cream business, with strong growth
prospects and an exciting future as a standalone business."

 

Hein Schumacher, CEO of Unilever said: "Under the Growth Action Plan we have
committed to do fewer things, better, and with greater impact. The changes we
are announcing today will help us accelerate that plan, focusing our business
and our resources on global or scalable brands where we can apply our leading
innovation, technology and go-to-market capabilities across complementary
operating models.

 

"Simplifying our portfolio and driving greater productivity will allow us to
further unlock the potential of this business, supporting our ambition to
position Unilever as a world-leading consumer goods company delivering strong,
sustainable growth and enhanced profitability.

 

"We are committed to carrying out our productivity programme in consultation
with employee representatives, and with respect and care for those of our
people who are impacted."

 

ENDS

 

Enquiries

 

Media:

Unilever Press Office

press-office.london@unilever.com (mailto:press-office.london@unilever.com)

 

Lucila Zambrano

+44 78 2527 3767

Lucila.zambrano@unilever.com (mailto:Lucila.zambrano@unilever.com)

 

Jonathan Sibun

+44 77 7999 9683

Jonathan.sibun@teneo.com (mailto:Jonathan.sibun@teneo.com)

 

Investors:

Investor Relations Team investor.relations@unilever.com
(mailto:investor.relations@unilever.com)

 

 

About Unilever

Unilever is one of the world's leading suppliers of Beauty & Wellbeing,
Personal Care, Home Care, Nutrition and Ice Cream products, with sales in over
190 countries and products used by 3.4 billion people every day. We have
128,000 employees and generated sales of €59.6 billion in 2023.

 

For more information about Unilever and our brands, please visit
www.unilever.com (http://www.unilever.com) .

 

 

Notes to editors

 

Important information

This announcement contains inside information. This is a public announcement
pursuant to Article 17 Paragraph 1 of the European Market Abuse Regulation
(596/2014), including as it forms part of UK law.

 

Safe Harbour

This announcement contains forward-looking statements within the meaning of
the securities laws of certain jurisdictions, including 'forward-looking
statements' within the meaning of the United States Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical fact are, or may be deemed to be, forward-looking statements. Words
and terminology such as 'will', 'aim', 'expects', 'anticipates', 'intends',
'looks', 'believes', 'vision', 'continue', 'should', 'would be', 'seeks', or
the negative of these terms and other similar expressions of future
performance, results, actions or events, and their negatives, are intended to
identify such forward-looking statements. Forward-looking statements include,
but are not limited to, statements and information regarding Unilever's
acceleration of its Growth Action Plan, Unilever's portfolio optimisation
towards global or scalable brands, the capabilities and potential of such
brands, the structure, timing, impacts and other aspects of the separation of
Ice Cream, Ice Cream's future operational model, strategy, growth potential,
performance and returns, Unilever's productivity programme, its impacts and
cost savings over the next three years and operation dis-synergies from the
separation of Ice Cream, the post-separation and post-disposal structure,
operating model, strategy, portfolio, performance and returns of Unilever,
including but not limited to Unilever's post-separation topline growth and
margin. Forward-looking statements can be made in writing but also may be made
verbally by directors, officers and employees of the Group (including during
management presentations) in connection with this announcement. These
forward-looking statements are based upon current expectations and assumptions
regarding anticipated developments and other factors affecting the Group. They
are not historical facts, nor are they guarantees of future performance or
outcomes. All forward-looking statements contained in this announcement are
expressly qualified in their entirety by the cautionary statements contained
in this section. Readers should not place undue reliance on forward-looking
statements.

 

Because these forward-looking statements involve known and unknown risks and
uncertainties, a number of which may be beyond the Group's control, there are
important factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements. Among other
risks and uncertainties, the material or principal factors which could cause
actual results to differ materially from the forward-looking statements
expressed in this announcement are: Unilever's ability to obtain any approvals
necessary to consummate the separation of Ice Cream, Unilever's ability to
successfully separate Ice Cream and realise the anticipated benefits of the
separation; Unilever's ability to successfully execute and consummate its
productivity programme in line with expected costs to achieve expected
savings; Ice Cream's ability to succeed as a standalone company; Unilever's
global brands not meeting consumer preferences; Unilever's ability to innovate
and remain competitive; Unilever's investment choices in its portfolio
management; the effect of climate change on Unilever's business; Unilever's
ability to find sustainable solutions to its plastic packaging; significant
changes or deterioration in customer relationships; the recruitment and
retention of talented employees; disruptions in Unilever's supply chain and
distribution; increases or volatility in the cost of raw materials and
commodities; the production of safe and high quality products; secure and
reliable IT infrastructure; execution of acquisitions, divestitures and
business transformation projects; economic, social and political risks and
natural disasters; financial risks; failure to meet high and ethical
standards; and managing regulatory, tax and legal matters.

 

The forward-looking statements are based on our beliefs, assumptions and
expectations of our future performance, taking into account all information
currently available to us. Forward-looking statements are not predictions of
future events. These beliefs, assumptions, and expectations can change as a
result of many possible events or factors, not all of which are known to us.
If a chance occurs, events, our business, financial condition, liquidity and
results of operations may vary materially from those expressed in our
forward-looking statements.

 

The forward-looking statements speak only as of the date of this announcement.
Except as required by any applicable law or regulation, the Group expressly
disclaims any intention, obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herein to
reflect any change in the Group's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based. New risks and uncertainties arise over time, and it is not possible for
us to predict those events or how they may affect us. In addition, we cannot
assess the impact of each factor on our business or the extent to which any
factor, or combination of factors, may cause actual events, to differ
materially from those contained in any forward-looking statements. Further
details of potential risks and uncertainties affecting the Group are described
in the Group's filings with the London Stock Exchange, Euronext Amsterdam and
the US Securities and Exchange Commission, including in the Annual Report on
Form 20-F 2023 and the Unilever Annual Report and Accounts 2023.

 

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