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Hindustan Unilever will spin off its ice cream business, which contributes 3% to its turnover. This restructuring aims to focus on core sectors, while the ice cream unit requires specialised infrastructure. The Hindustan Unilever share price saw a minor dip.
Hindustan Unilever Limited (HUL), one of India’s largest FMCG companies, announced its decision to separate its ice cream business as part of a strategic restructuring. This move comes after the company’s independent committee recommended the separation, citing the unique operating model of the ice cream business, which requires significant investments in specialised cold chain infrastructure.
Currently, HUL's ice cream division, which includes well-known brands such as Kwality Wall’s, contributes around 3% to the company’s overall turnover. However, the division's distinct requirements, including specialised distribution channels and infrastructure, limit synergies with HUL’s core operations in sectors like Beauty, Foods, and Health and Wellbeing.
The spin-off will allow HUL to sharpen its focus on these primary sectors while enabling the ice cream business to operate independently with greater flexibility. The separation is also seen as an opportunity to invest more in the high-growth ice cream category and develop local capabilities.
HUL’s independent committee has emphasised the significant growth potential in the ice cream sector, which could be realised with additional investments and operational focus. This restructuring aligns with HUL’s strategy to streamline its operations and maximise shareholder value.
The Board of Directors is expected to finalise the separation process by the end of this year, with a focus on achieving the best possible outcome for shareholders.
HUL reported its results for the second quarter of FY2025, recording a domestic volume growth of 3%. The company posted a net profit of ₹2,612 crore, slightly below expectations. The Hindustan Unilever share price closed 0.83% lower at ₹2,659.35 on October 23, 2024, following the announcement. The stock is currently 10% down from its 52-week high of ₹3,035.
HUL’s decision to spin off its ice cream division marks a significant step in its strategic restructuring, allowing the company to focus on its core operations while positioning the ice cream business for future growth.
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