HUL to spin off ice cream biz to sharpen focus on core operations

Hindustan Unilever (HUL) plans to separate its ice cream business from its main operations, after a review by independent directors, the company disclosed in its exchange filing today. The ice cream segment contributes to about 3% of the company’s total turnover.

“Ice Cream is a high-growth category that needs significant investments to realise its full potential… (the segment) has a different operating model including cold chain infrastructure, and a distinct channel landscape, which limits synergies with the rest of HUL,” the company stated in its press release.

With Unilever retaining ownership of trademarks and know-how, HUL will need to develop local capabilities to sustain operations, the company stated in its official October 23 filing to the exchanges.

“This portfolio restructuring will enable HUL to sharpen focus on the core business and further strengthen its play in trending demand spaces such as Beauty, Foods, Health and Wellbeing. It will also enable the Ice Cream business to operate with greater flexibility and focus,” the official statement read.

The Board is expected to finalise the mode of separation by the end of the year, based on the committee's recommendations.

In a separate exchange filing, the company reported its financial results for the second quarter of the fiscal year. Hindustan Unilever posted a consolidated net profit of ₹2,591 crore, a 2.4% decline from the ₹2,668 crore recorded in the same quarter last year, falling short of market expectations. High commodity inflation and muted demand weighed on the quarter’s performance. The company's EBITDA stood at ₹3,647 crore, with an EBITDA margin of 23.8%. Margins were expected to remain under pressure due to higher advertising spends and increased royalty payments to parent company Unilever.

Revenue, however, exceeded forecasts, rising 2.1% year-on-year to ₹16,145 crore, against the projected ₹15,694 crore. The FMCG major reported a 3% domestic volume growth for Q2 FY25, during the July-September period.

Furthermore, HUL declared a total interim dividend of ₹29 per share, comprising a regular interim dividend of ₹19 and a special dividend of ₹10. The record date is set for 6 November, 2024, with the dividend payout scheduled for 21 November, 2024.

Segment-wise, the Home Care segment posted a revenue of ₹5,737 crore in Q2, growing 8% with strong volume momentum. Fabric Wash and Household Care saw single-digit growth, while the liquids portfolio achieved double-digit gains. The company expanded its liquids range with Rin and launched Vim in the floor cleaner market. Beauty & Wellbeing grew 7%, generating ₹3,323 crore, led by strong performance in Hair Care with brands like Sunsilk and Dove, while the premium skin portfolio maintained double-digit growth.

Personal Care revenue stood at ₹2,412 crore but declined 5% due to pricing and volume drops. However, bodywash saw double-digit growth, and Closeup led Oral Care’s high single-digit increase. Foods & Refreshment revenue fell 2% to ₹3,803 crore, with tea and coffee showing strength. The quarter saw new product launches, including Horlicks ₹10 sachet and Knorr’s Korean Kimchi Soup.

Shares of Hindustan Unilever closed 0.83% lower at ₹2,659.35 on the NSE today. The stock is down 12% from its 52-week high of ₹3,035.