Unilever plans to divest most of European frozen foods business

by Jeff Gelski
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LONDON — Unilever has decided to put the majority of its frozen foods business in Europe up for sale. It will retain its frozen food operation in Italy. The London-based company made the announcement on Thursday, the same day it reported an operating profit of €2,857 million ($3,415 million) for its four food categories combined in the fiscal year ended Dec. 31, 2005.

Unilever said the European frozen foods business was still profitable, but it required investment to grow and the company decided it had better opportunities elsewhere. Unilever’s frozen foods are found under the Iglo and Birds Eye brands in 11 European countries. Unilever’s Italian frozen foods business is its biggest business in Italy and plays an important role in trade relations in that country, the company said.

"It is also an important source of innovation and technology in the attractive frozen meals segment that is proving so successful in the United States," said Patrick Cescau, group chief executive.

Unilever posted growth in 2005 in all food categories in Europe except for frozen foods. In food in the United States, Unilever made further share gains in ice cream. The extension of its Country Crock and Bertolli brands into new categories met with good results as did Lipton Ready-to-Drink and specialty teas. Slim-Fast continued to regain share but in a much contracted weight management market. Sales of Slim-Fast were below the previous year.

Overall in the Unilever food categories, sales were €22,160 million ($26,490 million) for fiscal year 2005, a 1% increase from €21,964 million ($26,252 million) in the previous fiscal year. Operating profit of €2,857 million compared with €2,108 million in the previous year.

In the fourth quarter of 2005, Unilever food categories reported sales of €5,517 million, up 1% from €5,474 million in the previous year’s fourth quarter. An operating profit of €505 million in the fourth quarter compared with a loss of €506 million in the previous year’s fourth quarter.

In the savory and dressings category, operating profit was €1,286 million for the full year, which compared with €1,226 in the previous fiscal year, and €277 million for the fourth quarter, which compared with €224 million in the previous fourth quarter. Spreads and cooking products reported an operating profit of €756 million in the year (€681 million in the previous year) and €166 million for the fourth quarter (€137 million in last year’s fourth quarter).

Beverages posted an operating profit of €48 million in the year after seeing an operating loss of €508 million in the previous fiscal year. Operating profit of €92 million in the fourth quarter compared with an operating loss of €805 million in the previous year’s fourth quarter. Ice cream and frozen foods saw operating profit of €767 million for the year (€709 million in the previous year) and an operating loss of €30 million in fourth quarter, which compared with a loss of €62 million in the previous year’s fourth quarter.

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