Red Star Capital Bureau has noticed that the international consumer goods giant Unilever has new trends in divesting its ice cream business.
In March this year, Unilever announced that it would spin off its ice cream business with brands such as Heluxue, Menglong, and Kaidoo. Recently, according to Jiemian News citing foreign media reports, Unilever has begun preliminary discussions with private equity companies such as Advent International, Blackstone , and CVC Capital on the possibility of selling its ice cream business. It is expected to officially launch ice cream business in the second half of this year. The process of selling a business. Unilever's ice cream business accounts for approximately 1/5 of the global market, ranking second in China's ice cream market share.
Red Star Capital Bureau found that Unilever’s ice cream business sales increased in 2022 and 2023. Why did Unilever finally make the decision to divest the ice cream business?
Sales volume declined, and sales growth was all due to Price increases drive
Red Star Capital Bureau noticed that although the sales of Unilever's ice cream business have increased in the past two years, its sales have declined. The increase in sales is mainly due to price increases.
In 2022, Unilever's ice cream business revenue was 7.9 billion euros, a year-on-year increase of 14.8%, and basic sales increased by 9.0% year-on-year. However, the growth was mainly due to a 9.7% price increase, and sales volume fell by 0.7%.
In 2023, Unilever's ice cream business will have a turnover of 7.9 billion euros, with a decline in growth rate, a year-on-year increase of 0.5%, and underlying sales growth of 2.3%, mainly due to price increases. According to the financial report, the pricing of the ice cream business increased by 8.8%, and sales volume decreased by 6%.
Unilever stated in its 2023 financial report that the performance of ice cream throughout the year was disappointing, with market share and profitability declining.
In the first half of 2024, Unilever's ice cream business continued the trend of slight increase in basic sales and declining sales.
Red Star Capital Bureau noticed that behind the sale of the ice cream business, Unilever’s performance continued to be under pressure. In 2022, Unilever has already increased revenue but not profit. In 2023, Unilever will experience a decline in both revenue and net profit attributable to the parent company.
In the past two years, Unilever has been trying various methods to reduce costs and increase efficiency.
In addition to its ice cream business, Unilever has sold multiple businesses, including its personal care segment Elida Beauty and its water purification brand Pureit. Unilever estimates that divesting its ice cream business will save the company approximately 800 million euros in costs over the next three years.
Unilever said this will also help Unilever management accelerate the implementation of the 'Growth Action Plan', thereby improving production efficiency and simplifying the organization.
While divesting multiple businesses, Unilever also initiated large-scale layoffs.
According to multiple media reports, in March 2024, Unilever said it planned to lay off about 7,500 positions. It was revealed again in July that Unilever plans to lay off employees in Europe by the end of 2025, which will involve 3,200 employees.
Expert: It should not have any impact on Heluxue’s business in China
Red Star Capital Bureau learned that Unilever’s ice cream business currently ranks second in China’s market share.
In 1993, Unilever's ice cream business officially entered China with "Heluxue". By putting branded freezers into terminals for free, Heluxue gradually opened up channels and popularity in the country. Later, Menglong and Kaidoduo entered China, both of which are Heluxue's brands.
If the ice cream business is divested from Unilever, what impact will it have on the production and sales of Heluxue in the Chinese market?
Red Star Capital Bureau consulted Heluxue China on July 30, and the other party said that there is currently no more information. , subject to the information released by the company globally.
Several ice cream wholesalers told the Red Star Capital Bureau on June 4 that the people they deal with to purchase and receive goods have not changed. They are relatively independent of Luxue China, and it is estimated that even if they are divested, the impact will not be significant.
dairy analyst Song Liang told Red Star Capital Bureau on July 30: “The divestiture will not have any impact on Heluxue’s business in the Chinese market.First of all, Unilever China’s ice cream business is an independent business, with its own R&D, factories, and sales teams. In addition to selling its products in China, its products are also exported to Southeast Asia, Japan, South Korea and other countries and regions, so after the spin-off, it will be used throughout China. There will be no impact on the market. Secondly, the so-called divestiture is equity exchange. After the new equity is involved, I think it will better help the business and increase investment in the Chinese market. The divestiture is a good thing for Unilever and Luxue. ”
Source: Red Star News
