Unilever is to spin off its ice cream unit, home to popular brands such as Magnum and Ben & Jerry's, and cut 7,500 jobs in a new cost-savings programme.
Investors cheered the plan announced on Tuesday, sending shares in the company up nearly 6 per cent at one point.
Unilever is one of the world's biggest consumer goods companies, with Hellmann's, Vaseline, Knorr and Dove among its well-known brands
The spinoff will begin immediately and is expected to completed by the end of 2025, the company said. The ice cream business is "in the process of moving to a separate head office in Amsterdam", but chief executive Hein Schumacher said he is "open to options" regarding where it could list.
The plan was welcomed by activist investor and board member Nelson Peltz's fund and by Unilever shareholder Aviva.
Unilever said it aims to deliver mid-single-digit underlying sales growth and modest margin improvement after the split. The ice cream business accounts for about 16 per cent of Unilever's global sales, and in some countries contributes a third or 40 per cent.
The group also launched a programme to save costs of around €800 million over the next three years. The proposed changes would impact around 7,500 jobs globally, mostly office-based, with total restructuring costs anticipated to be around 1.2 per cent of overall turnover during the period.
The cuts will affect about 5.9 per cent of Unilever's workforce of about 128,000 people.
"We are looking across the organisation, so in our head office, corporate centre, as well as in business group coordination points, as well as in business units in countries," Mr Schumacher said, but did not elaborate on which regions would be hit hardest by job cuts.
The move is a big statement from Mr Schumacher, who became chief executive in July and in October laid out plans to win back investor confidence by simplifying the business after admitting Unilever had underperformed in recent years.
His predecessor, Alan Jope, was criticised for allowing the group's brand portfolio to grow to about 400, leaving management distracted from its best performers.
Volatile business
The underperformance attracted the attention of billionaire activist investor Mr Peltz, who took a seat on Unilever's board in 2022 via his Trian investment vehicle and has a record of shaking up consumer goods companies. The fund, which owns a 1.45 per cent stake according to LSEG data, said it "supports the strategic initiatives announced today by Unilever".
"Nelson Peltz looks forward to continuing to work with the other members of Unilever's Board as the company executes on initiatives to increase long-term stakeholder value," Trian said in a statement.
Unilever's shares jumped nearly 6 per cent in early trading and were up 3 per cent by 11am. The stock has dropped 5.8 per cent over the past year.
"(Ice cream) has been quite a volatile business and has also been dilutive from a margin standpoint, so we think strategically this makes sense,” Richard Saldanha, portfolio manager at Aviva, which is Unilever's 17th biggest shareholder with a 0.5 per cent stake, said.
"Great news for shareholders regarding the ice cream division as it has been a drag on the business as a whole for some time, share price should respond accordingly this morning," Jack Martin, portfolio manager at Oberon Investments, which owns a small Unilever stake, said.
In October, Mr Schumacher said the company would focus on 30 key brands which account for 70 per cent of its sales, work on improving its gross margin and not undertake any major or transformational acquisitions.
Mr Schumacher also said last month that he would not shy away from streamlining Unilever's workforce.
"We have a big agenda," he said on Tuesday. "This is going to be a very busy period for the next 18 months or so."
-Reuters
