19 March 2024
If you are covering the news that Unilever is to split off its ice cream business, please see comment below from Chris Beckett, head of equity research at Quilter Cheviot:
“Unilever’s stock has risen following the announcement that it is set to demerge its ice cream division. While this increase is comprehensible, given the market’s typical reaction to such corporate restructuring, it may be argued that the surge is somewhat unwarranted. 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.
“Historically, Unilever’s decision to sell its tea business did not lead to a transformative impact on 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.
“However, it is important to acknowledge Unilever’s ongoing efficiency programme, which aligns with the standards of the best consumer staple companies that consistently strive for operational excellence. While the demerger is a notable event, it is the continuous pursuit of efficiency that often underpins enduring success in the sector.”
