HUL Announces Mass Layoffs: Over 7,000 Jobs To Be Cut, Magnum Ice Cream Business To Get Separated – Check Details (image source: Canva Edit)
FMCG major Hindustan Unilever (HUL) is set to lay off 7,500 employees and the company announced the separation of its ice cream unit into a standalone business as part of a cost-saving initiative, The company said in a press release that it is planning to complete the restructuring by the end of next year.
‘The Board has decided that the separation of Ice Cream best serves the future growth of both Ice Cream and Unilever. Separation activity will begin immediately, with full separation expected by the end of 2025. Further information will be provided in due course. 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 per cent of Group turnover for the next three years,’ Hindustan Unilever said in a press release.
Reasons for Separation
Unilever is exploring various options for the separation of its ice cream division, with a demerger creating a newly listed business being the most likely choice. This move comes as Unilever seeks to streamline operations and drive growth. In 2023, the ice cream unit recorded sales of $8.6 billion.
‘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,’ HUL noted.
HUL Focus on Cost Savings
The restructuring initiative is aimed at achieving €800 million in cost savings over the next three years. The majority of the job cuts will impact office-based roles, aligning with Unilever’s goal of optimizing efficiency across its operations.
HUL Strategic Focus Areas
Following the restructuring, Unilever will streamline its focus on four core businesses: beauty and wellbeing, personal care, home care, and nutrition. This strategic shift reflects Unilever’s commitment to maximizing shareholder value and enhancing its competitive position in key markets.
‘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,’ HUL stated.
Separating the ice cream unit will also help Unilever mitigate challenges related to controversies surrounding its subsidiary, Ben & Jerry’s. Recent disputes, including objections to product sales in certain regions and criticism over political stances, have prompted Unilever to reconsider the structure of its ice cream business.
HUL Share Price
HUL share price by the end of the Tuesday trading session lost over 1.2 per cent and settled at Rs 2,271.
