HUL To Demerge Ice Cream Business Following Independent Valuation

During an earnings call, HUL's Chief Financial Officer, Ritesh Tiwari, confirmed that the company had undertaken an independent valuation of the ice cream division

Hindustan Unilever Ltd (HUL) announced on Wednesday its decision to demerge its ice cream business, which includes popular brands such as Kwality Wall's, Cornetto, and Magnum. The move follows an independent valuation conducted to assess the business's potential.

In a statement, HUL's board confirmed that the decision was based on recommendations from an independent committee formed in September 2023. The committee highlighted that the ice cream business, contributing around 3 per cent to HUL’s total turnover, operates with a unique model, including cold chain infrastructure and distinct distribution channels, which limit its synergy with HUL's other businesses.

During an earnings call, HUL's Chief Financial Officer, Ritesh Tiwari, confirmed that the company had undertaken an independent valuation of the ice cream division. "The board has reviewed the valuation today, and it will be one of the key factors guiding the separation process," Tiwari said. He added that the demerger would proceed through a "competitive process."

The demerger is part of a broader portfolio restructuring aimed at sharpening HUL's focus on core areas such as beauty, foods, health, and wellbeing. "This will allow the ice cream business to operate with greater flexibility and focus," HUL said in a statement. The board is expected to determine the mode of separation by the end of 2024. This move follows the global strategy of HUL's parent company, Unilever PLC, which had earlier announced plans to separate its ice cream business worldwide.

The company reported a net profit of Rs 2,591 crore for the quarter ended September, marking a 2.4 per cent decline. Volume growth stood at 3 per cent. For the financial year ended March 2024, HUL reported revenues of Rs 59,579 crore from product sales.

In related news, HUL’s Executive Director, Legal, Corporate Affairs, and Company Secretary, Dev Bajpai, has opted for early retirement by the end of the year. The board has approved the appointment of Radhika Shah as his successor, effective from January 1, 2025.