Dive Brief:
- Unilever reported continued sales declines in its margarine unit, and the resignation of the margarine segment's CEO, Sean Gogarty, has prompted speculation of a spin-off of that business, according to The Wall Street Journal.
- The departure was "motivated by incompatible views on how the spreads business should be run" after Amanda Sourry became president of Unilever’s food division in October, a person familiar with the matter told The Wall Street Journal.
- Margarine's setbacks aside, Unilever reported positive progress for 2015, including a 10% increase in revenue and 12% boost to core operating profit.
Dive Insight:
Speculation of a margarine business sell-off has come up before, including last July when spreads became part of a standalone unit, but Unilever has denied those rumors. According to Société Générale, the spreads business contributes a consistent cash flow, including about 5% of company sales and around 8% of profit. Unilever is the world's leading margarine producer, and margarine has been a key part of the company's history from the beginning.
However, the growth of other segments, including refreshments and home-care products, could negate the need for the cash flow margarine has provided in the past. Also, as Unilever pursues more aggressive cost-cutting strategies throughout the company, underperforming businesses could get the boot.
However, margarine has been on the losing end of the rise of butter. In 2015, U.S. unit sales of butter and butter blends jumped 4.2% while margarine unit sales sank 8.9%, according to IRI. Last year, for the first time, the industry also saw butter prices drop below margarine prices, Unilever CEO Paul Polman told The Wall Street Journal.
Last quarter, Unilever posted its highest growth rate in nearly three years, due in part to the successes of its ice cream segment.