Unilever announced a significant boost in its third-quarter sales, largely attributed to the impressive performance of its ice cream division. The company, known for brands like Marmite and Magnum, plans to spin off this division by the end of next year.
For the three months ending in September, Unilever reported a sales increase of 4.5%, surpassing a consensus estimate of 4.2%. The volume of goods sold rose by 3.6%, with total revenues remaining flat at €15.2 billion.
Notably, sales from Unilever’s ice cream brands, including Ben & Jerry’s and Wall’s, surged by 9.8% compared to the same period last year, significantly outperforming the expected growth rate of 4.3%.
Excluding the ice cream sector, Unilever’s sales increased by 3.6% during the third quarter. Chief Executive Hein Schumacher remarked that the ongoing separation of the ice cream business—which Barclays estimates could be valued at €17 billion—along with a plan to enhance productivity that includes laying off 7,500 employees, is proceeding according to schedule. He anticipates that the separation will be finalized by 2025.
“We are starting to see the positive impact from scaling fewer, bigger innovations across our markets, supported by increased brand investment,” Schumacher stated.
Following years of disappointing financial results, Unilever is undergoing a significant turnaround that has pleased investors. The company’s shares had risen by approximately 20% earlier this year before the latest announcement, and they increased by an additional 3.4% in early trading on Thursday.
In its recent update, Unilever noted it is in the process of establishing a legal entity, a standalone operating model, and the financial frameworks necessary for the ice cream division’s carve-out. Earlier reports from the Financial Times indicated that Unilever had enlisted bankers to explore potential private equity buyers for its ice cream business, while also considering a public listing.
Interestingly, Unilever’s ice cream operations are managed from Rotterdam, separate from its global headquarters in London.
In contrast, other consumer and luxury brands, such as L’Oréal and LVMH, have faced challenges due to persistently weak demand in China. Unilever reported a low single-digit decline in sales within the country, driven by ongoing weak consumer sentiment. Additionally, diminished demand for high-end skincare and makeup in both China and the U.S. adversely affected the company’s prestige beauty segment.
Despite these challenges, Callum Elliott, an analyst at Bernstein, described Unilever’s results as “reassuringly robust” and believes they will be positively received following recent weak performance trends in Asia.
In a related move, Unilever recently sold its Russian operations for €520 million to industrialist Alexei Sagal’s chemicals group, Arnest. This division, which included four factories, represented about 1% of the group’s turnover and net profit in 2023.
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