Some of Britain’s favourite spreads are being shunned and sold off by household products giant Unilever.
As part of its restructuring scheme to save over £5billion, Unilever has decided to sell or ‘demerge’ Flora margarine, Stork butter and I Can’t Believe It’s Not Butter.
In a statement outlining the findings of its latest business review, Unilever confirmed the future of the well-known spreads ‘now lies outside the group.’
Out in the cold: Some of Britain’s favourite spreads are being shunned and sold off by products giant Unilever
The decision to axe the ‘challenged’ spreads group was driven by poor sales in ‘developed markets.’
A sale of the spreads division, which was set up in 2015, could make Unilever around £6billion, analysts predict. It is not yet clear how many jobs in the division are at risk.
The decision to offload its spreads business comes as the firm regroups after US food giant Kraft Heinz dropped its £115billion takeover bid for Unilever in February, just two days after making its first unsolicited bid.
Shares in FTSE 100 listed Unilever are up 0.62 per cent to 3,963.75p this morning.
Neil Wilson, a senior market analyst at ETX Capital, said: ‘The Kraft Heinz bid was a massive wake-up call.
‘Unilever realised it needed to do more for shareholders but it also has to improve margins – the appeal of Kraft’s bid was being able to squeeze far higher margins out of the business – bribes alone won’t work.
‘The test is whether it can achieve underlying operating margin of 20% by 2020 while growing the business in emerging markets. That will generate long-term loyalty better than share buybacks.’
In a bid to drive up profits, the Anglo-Dutch firm also said it plans to combine its food and refreshment units.
On top of that, the firm wants to boost dividends for shareholders by 12 per cent.
Paul Polman, chief executive of Unilever, said: ‘Our recent review concluded once more that our strategy for long-term value creation through growth and compounding returns on investment is the right one for Unilever and for our shareholders.
‘It also highlighted the opportunity to go faster and further.’
Flogged off: The decision to axe the ‘challenged’ spreads group was driven by poor sales in ‘developed markets’ Money making: A sale of the spreads division, which was set up in 2015, could make Unilever around £6billion
Speaking to BBC’s Today Programme, Mr Polman said Unilever also intends to look at changing its status as a dual-listed firm in two countries.
Last month, Unilever used its annual report to announce changes to its policies underpinning executive pay.
The group, which is behind brands like Dove, Hellman’s and Ben & Jerry’s, said pay for the top 500 bosses would be more closely aligned with how much cash the company doles out to shareholders.
In October last year, Unilever hit the headlines for its high-profile spat with supermarket giant Tesco.
Tesco pulled a number of Unilever’s products, including Marmite, from its shelves, after Unilever demanded price hikes of around 10 per cent to soak up rising costs amid sterling’s depreciation after June’s Brexit vote.
Drama: Tesco pulled a number of Unilever’s products, including Marmite, from its shelves, after Unilever demanded price hikes of around 10 per cent