LONDON – When Unilever announced in March it planned to separate its ice cream business from the rest of the company, management said a spin off was likely, but all options would be considered. During an April 25 conference call to discuss first-quarter results, the company reaffirmed a spin off remains the most likely scenario, that separation of the business has begun and is expected to be completed by the end of 2025.

“This is an option that gives us absolute control in terms of the separation,” said Fernando Fernandez, chief financial officer. “Of course, as we mentioned also that day, other options for separation will be considered if they offer a superior value creation for our shareholders.”

Fernandez emphasized that spinning off ice cream had more to do with where Unilever is as a company today than with the performance of the business.

“… It was a clear outlier in our portfolio with a very different margin structure, much more capital intensity, less cash conversion and, of course, a complete different channel profile, a cold chain, a low level of complementarity with the rest of our portfolio in terms of manufacturing, distribution, R&D systems, etc.,” he said. “So, we believe that the separation will result in a more focused Unilever.

“It will be a simpler business, a much more focused portfolio. And this will allow us to grow faster, to have a higher structural margin and a higher structural return on assets and cash conversion.”

During the first quarter, Unilever had sales of €15 billion ($16.05 billion), up 1.4% over the first quarter of 2023 when the company had sales of €14.8 billion ($15.8 billion).

Nutrition business unit sales rose 3.7% to €3.4 billion, with price contributing 4.1 percentage points to the growth and volume falling 0.4 points. The company said business unit volume improved during the quarter, but was affected by stock-keeping unit reductions in Europe.

“The sequential improvement in volume is important, remembering that Nutrition is later in the commodity inflation cycle and is a category where there has been a substantial assortment rationalization,” Fernandez said.

Ice Cream business unit sales were €1.8 billion, up 2.3% compared with the same period of the year prior. Price contributed 3.2 percentage points to the growth but was offset by a volume decline of 0.9 points.

“In-home was flat, whilst out-of-home grew mid-single digit; in both cases, led by price, offset by a decline in volume,” Fernandez said. “The increase in pricing reflects necessary action taken given the increased cost of critical ingredients such as cocoa and sugar.”