Ice cream first, arithmetic later. UBS thinks the forthcoming spin-off of The Magnum Ice Cream Company (TMICC) leaves Unilever PLC (LSE:ULVR) with more moving parts than the market appreciates — and not much near-term help to earnings.
Start with the timetable. TMICC is expected to list on 8 December in London, New York and Amsterdam. On that day, UBS expects Unilever’s share price to drop by roughly 80.1% of TMICC’s equity value, reflecting the value handed to investors, with Unilever retaining a 19.9% stake.
The following day, 9 December, Unilever plans a share consolidation.
That is a mechanical reduction in the number of shares, using a “scrip factor” that aims to restore the post-demerger share price to roughly the pre-demerger level, without changing the overall value of the company.
Accounting matters here. UBS argues TMICC will sit on Unilever’s books as a financial asset, not an associate, so Unilever will not recognise TMICC profits, only dividends when they arrive.
TMICC is not expected to start paying dividends until the first half of 2027. Unilever also intends to cut its 19.9% stake over five years, which limits any ongoing contribution.
Earnings, then? UBS estimates Unilever’s net income falls about 10% post-demerger, implying a 2026 earnings per share decline of 5.7% versus its pre-demerger growth forecast.
Depending on how the consolidation factor is applied, the optical hit to 2026 earnings per share could look smaller, with UBS’s illustrations ranging from a 2.3% decline to 1.4% growth; but that is presentation, not cash.
The stance is cautious: 'sell', with a 12-month price target of 4,120p against a 7 November close of 4,618p (-10.78% to target). For now, the treats are spun off while the calories to Unilever’s earnings diet are cut.