Wed Oct 23 13:38:22 UTC 2024: Hindustan Unilever Ltd. (HUL) announced the separation of its ice cream segment due to its limited contribution to profitability. Key points include:
– The board’s decision follows a recommendation from a committee of independent directors formed in September to assess the ice cream business’s viability.
– The committee highlighted that while ice cream is a high-growth category, it requires substantial investments and operates with different requirements (i.e., cold chain infrastructure) that limit synergies with HUL’s other divisions.
– HUL aims to focus on its core business areas such as beauty, foods, health, and wellbeing through this restructuring.
– The ice cream division, featuring brands like Kwality Walls, Magnum, and Cornetto, contributed only 3% of HUL’s revenue (Rs 58,154 crore) in fiscal 2023 and lacks significant profitability.
– HUL aims to develop local capabilities for managing the ice cream business post-separation, as Unilever owns the trademarks and know-how.
– The company will determine the specific mode of separation by the end of this year.
– Following the announcement, HUL’s shares declined by 0.9%.
The details of the separation plan are expected to be released by the end of 2024.
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