Hindustan Unilever Limited (HUL) unveiled its plan to separate its ice cream business during the Q2 FY25 results, a move made after thorough evaluation by a committee of Independent Directors. The company recognized the ice cream category as a significant high-growth market, constituting about 3% of HUL's total revenue, and stressed the necessity for substantial investments to fully capitalize on its growth prospects.
In a statement submitted to the exchange, HUL pointed out that for the ice cream business to thrive independently, local capabilities would have to be nurtured in light of Unilever's expertise and trademarks in this segment. The specialized cold chain infrastructure and unique channel landscape under which the ice cream business operates present challenges in integrating synergies with HUL's other operations, necessitating a separate strategic direction.
HUL's restructuring strategy aims to prioritize core business segments while expanding its presence in thriving sectors like Beauty, Foods, Health, and Wellbeing. By divesting the ice cream business, the company seeks to enhance focus and flexibility for that specific segment, ultimately optimizing value for shareholders. Despite a slight dip in consolidated net profit during the September quarter of FY25, the company reported a 3% growth in underlying volume, attributing the profit decline partially to a one-time indirect tax credit in the previous year that had positively impacted the Beauty and Wellbeing segment. The company's revenue saw a 1.9% year-on-year increase to Rs 15,926 crore, with a 0.7% rise in profit before interest, depreciation, and tax (PBIDT) in the July-September period, reaching Rs 4,006 crore. CEO Rohit Jawa acknowledged the moderating FMCG demand growth in urban markets during the quarter, with rural areas showing gradual recovery, emphasizing the company's delivery of a competitive and profitable performance in this environment.