LONDON, Sept 9 (Reuters) - Unilever's Magnum-led ice cream unit that it is spinning off will see average annual organic sales growth of 3-5% in the medium-term from 2026, the Magnum Ice Cream Company said ahead of a capital markets day on Tuesday.
Unilever expects the ice cream unit, which includes brands such as Magnum, Ben & Jerry's and Wall's, to command just over a fifth of the around $88 billion global ice cream market and compete with rivals such as Nestle-backed Froneri.
The mid-November ice cream spin-off, which will see Unilever hold on to a sub-20% stake, presents a crucial test for CEO Fernando Fernandez as he looks to shake up the giant consumer goods firm, streamline management and boost margins.
The ice cream business, which includes four of the world's top five brands, generated 7.9 billion euros ($9.3 billion) in revenue in 2024 and 1.2 billion euros of adjusted EBITDA. The company's initial net debt to adjusted EBITDA ratio is expected to be 2.4x, Magnum said.
Ice cream was Unilever's fastest-growing category in the second quarter with underlying sales growth of 7.1%, but the division has typically delivered lower margins than the company's other sectors such as personal care and beauty and wellbeing.
The ice cream split forms part of Unilever's efforts to operate a more focused portfolio of goods that will enable it to enhance productivity and drive growth, mirroring moves made by peers.
Keurig Dr Pepper last month announced plans to combine with JDE Peet's and then separate its cold beverage and coffee divisions, while Swiss food giant Nestle is considering selling underperforming brands in its vitamins division.
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Reporting by Alexander Marrow and Dimitri Rhodes; Editing by Kirsten Donovan, Alexandra Hudson
Source: Reuters