Unilever revealed Tuesday its plan to cut 7,500 jobs and split up its ice cream unit, which handles popular brands such as Magnum and Ben & Jerry's, to reduce costs and boost profits.

In a press statement, the company said: "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."

According to CNBC, Unilever shares jumped 5.6% following the announcement before settling for a 4.1% gain at 9:20 a.m. London time. The British consumer goods giant said the restructuring will start immediately and is expected to be completed by the end of 2025.

The company anticipates total cost savings of about 800 million euros, or $868.3 million, over the next three years from its restructuring plan.

Unilever Separating Ice Cream Business

Unilever said this move would enable the company to streamline its operations and concentrate on its core competencies in four business groups across nutrition, home care, personal care, and beauty and wellness.

It also pointed out that its ice cream division, which brought in 7.9 billion euros ($8.6 billion) in 2023, would be more successful operating alone. About 13% of Unilever's 59.6 billion euros ($64 billion) in sales in 2023 came from the ice cream unit.

Unilever said the restructuring plan would help the firm to become "a simpler, more focused company," with four distinct business units.

"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," the company said in the statement.

"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," it added.

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Will It Work?

Chris Beckett, Quilter Cheviot's head of equity research, expressed doubts about the restructuring's effect on the company's overall performance.

"The division in question is noted for its lower growth compared to Unilever's overall performance, suggesting that the demerger might not significantly alter the company's growth trajectory," Beckett told CNBC.

Historically, Beckett noted that Unilever's decision to sell its tea business did not significantly impact the company's operations or value. 

"It stands to reason that this latest move to split off the ice cream business may follow a similar pattern, offering no substantial metamorphosis," he added.

Another source of trouble for the company was the Ben & Jerry's brand, which has taken a stand on several political topics.

In 2023, the US sued Unilever, saying it deceived investors by not telling them right away that Ben & Jerry's had decided to stop selling ice cream in Israeli-occupied Palestinian areas. Reuters reported that the case was eventually thrown out.

Earlier this year, Ben & Jerry's also received criticism for calling on the US government to return "stolen indigenous land."

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