Ice cream business is high growth but also high investment & low margin: HUL CEO Rohit Jawa

Hindustan Unilever has not yet decided on how the separation of the ice cream business would occur.

Ice cream is a high growth, but equally high investment and low margin business for us, said Hindustan Unilever CEO Rohit Jawa in the earnings call for the quarter ended September.

India's largest FMCG firm announced that its ice cream business, which includes brands such as Kwality Walls, Cornetto, and Magnum, will be separated.

The ice cream business has always seen limited synergies with the rest of the business, even for a typical kirana store, said Rohit Jawa, adding, "Our grocery business that we have is always distinct, when compared to the footprint of what we have in terms of ice cream."

The decision follows the announcement, earlier this year, by the company's parent entity, Unilever PLC, about its intention to separate its global ice cream business across jurisdictions.

Jawa said that both the brand and technology for HUL's ice cream business is owned by Unilever. While Unilever has announced a separation of the ice cream business globally, HUL would have to spend money to develop local capabilities to run the business, if they decided to keep it in the portfolio.

Also Read | Hindustan Unilever decides to separate its ice cream business

When questioned further about HUL's strong research and development capabilities, and if they wanted to keep the ice cream portfolio, Jawa said, "We have strong R&D as Unilever, which is why we have a contract of R&D with them. All of our R&D resources are essentially from Unilever."

Hindustan Unilever has not yet decided on how the separation of the ice cream business would be done. "Either we could sell the business or we could demerge and list the business. The independent committee will end up making a decision on what will maximize shareholder value and minimize business disruption," said Jawa.

Hindustan Unilever's consolidated net profit for the quarter ended Septemebr 2024 declined 2.4 percent to Rs 2,591 crore from Rs 2,668 crore in the same quarter a year ago, falling more than Street expectations.

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