01:33 PM EDT, 03/19/2024 (MT Newswires) -- Unilever ( UL ) said it will spin off its ice cream business and plans to slash roughly 7,500 jobs under a new program aimed at delivering around 800 million euros ($868.6 million) in cost savings over the next three years.

The British consumer goods giant's ice cream brands include Ben & Jerry's ( UL ), Wall's, and Magnum. Last year, the business delivered a turnover of 7.9 billion euros, up 0.5% from 2022, according to a statement. Compared with Unilever's ( UL ) other operating businesses, ice cream has "distinct" characteristics, including more seasonality and greater capital intensity, the company said Tuesday.

The move will help Unilever ( UL ) focus its business and resources on global or scalable brands "where we can apply our leading innovation, technology and go-to-market capabilities across complementary operating models," Chief Executive Hein Schumacher said. "Simplifying our portfolio and driving greater productivity will allow us to further unlock the potential of this business."

Post-separation, Unilever ( UL ) will operate four business groups across beauty and wellbeing, personal care, home care, and nutrition. The company said it expects to deliver mid-single digit underlying sales growth and "modest" margin improvement following separation.

Unilever's ( UL ) US-listed shares were up 2.6% in Tuesday afternoon trade.

"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," the company said, adding that it will contemplate other separation options. Unilever ( UL ) said the separation activity will start immediately, with full separation expected by the end of next year.

The company said its planned productivity program is expected to "further reduce complexity and duplication." It is expected to affect about 7,500 predominantly office-based roles worldwide. Unilever ( UL ) said it now expects total restructuring costs to be around 1.2% of group turnover for the next three years, up from 1% estimated previously.

A separation of Unilever's ( UL ) ice cream unit "makes sense" given its slower growth profile and lack of cost synergies because of its cold supply chain, RBC Europe analysts James Edwardes Jones and Emma Letheren said in a note.

"It's worth bearing in mind that value created from previous major disposals at Unilever ( UL ) has been diluted in the past by stranded costs," the analysts said, adding that the company's new productivity program might help its stranded costs.

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