NEW YORK ( The Deal) -- Anglo-Dutch consumer goods company Unilever NV/plc ( UL) on Thursday announced plans to remodel its spreads business as separate company in a move investors interpreted as a prelude to a sale.
Unilever, which makes Dove soaps and Ben and Jerry's ice cream, noted in an investor presentation that the spreads business accounts for 7% of revenue, which was €49.8 billion ($61.3 billion) last year, but has eroded group sales growth. CFO Jean-Marc Huet said that while spreads' operating margin was 20%, compared with 14% across the group, spreads revenue had declined more than 3% both last year and in the first nine months of 2014.
The new business, to be called the Unliever Baking, Cooking and Spreading Company, will include the Flora and I Can't Believe It's Not Butter brands. By July 1, it will have its own management, led by spreads vice president Sean Gogarty, profit and loss account, cash flow and balance sheet. It will focus on developed markets only. Unilever argues that the new structure will allow for rapid decision making as it seeks to stabilize spreads revenue. The structure will give the spreads company the benefits of being standalone entity while retaining the advantages of being part of the consumer goods conglomerate, a spokesman noted.
Unilever shares were up about 2% in London and Amsterdam on the prospect that the spreads business will be sold. The London and Rotterdam-based company said that's not on the agenda.
"We are not planning to sell or spin-off Spreads. It remains a core part of our business and the cash delivery is important to us," the spokesman said. "This proposal is all about reigniting the growth of our Spreads business to drive Unilever's long term success."
The spokesman declined to comment on the potential disposal of spreads brands outside the developed markets on which the new entity will focus.
Unilever told investors on Thursday it had raised €5.3 billion from disposals in the past five years, and spent €5.6 billion on acquisitions, resulting in a shift in its revenue mix towards personal care products, which account for 36% of sales, and away from food, which makes up 25% revenue. (The figures in 2008 were 28% and 35%, respectively).
Food disposals have been across the board, barring its ice cream and tea businesses.
Unilever in May agreed to sell its Ragu and Bertolli pasta sauce business to Japanese food maker Mizkan Group for about $2.15 billion and in July it sold its Slim-Fast slimming products lines to Kainos Capital for an undisclosed price.
On Tuesday Unilever said it will acquire Minneapolis-based Talenti Gelato e Sorbetto, a maker of all-natural gelato and sorbet that is projected to have $120 million in 2014 revenue.