Magnum goes public | EUROtoday

Admittedly, the timing may have been higher. When the ice cream producer Magnum goes public this Monday, only a few individuals will probably have any want for the milk ice cream on a stick to chocolate icing – however quite roasted almonds or sizzling crepes. The IPO will nonetheless trigger a stir, merely due to the Magnum model, which just about everybody is aware of.

Investors usually discover it notably engaging to put money into shares of corporations whose merchandise they use. Anyone who has an iPhone likes to purchase Apple shares. If you want sporting Nike, you may additionally discover the corporate’s shares attention-grabbing. But ought to anybody who likes consuming Magnum additionally purchase the inventory? One factor is definite: merely investing in shares of corporations whose merchandise you assume are nice can be too dangerous. It is necessary to know their enterprise mannequin and assess the probabilities of how nicely they’ll enhance gross sales and income.

Magnum itself was beforehand a part of the Unilever group, which sells meals and different client items, together with the Cif cleansing merchandise and the Dove cosmetics line. In addition to the Magnum model, the corporate’s ice cream division additionally contains Ben & Jerry’s, Cornetto and Langnese. Under the title “The Magnum Ice Cream Company”, or TMICC for brief, these manufacturers are scheduled to go public as an impartial firm on December eighth, in Amsterdam and likewise in New York and London. Unilever is splitting off the division. However: The group will proceed to carry a stake of virtually 20 % and can solely slowly hand over these shares over the following few years, in line with the group.

The IPO was initially presupposed to have taken place just a few weeks in the past. But then the federal government shutdown within the USA intervened. Republicans and Democrats have been unable to agree on a price range for a very long time, which additionally affected the work of authorities such because the US Securities and Exchange Commission. Magnum’s IPO due to this fact needed to be postponed, however now the time has come.

The cause for the spin-off is that ice cream may be very totally different from Unilever’s different merchandise and consequently there’s little synergy. Unilever additionally sells different meals merchandise. But ice cream is particular in that it has a really capital-intensive provide chain, says Diana Radu, fairness analyst at Morningstar. Finally, the ice cream have to be repeatedly cooled. This signifies that the revenue margin is on common decrease than with different Unilever merchandise. The goal of the spin-off is to turn into extra targeted, is the argument that’s repeatedly dropped at the fore in such processes.

In the third quarter, ice cream accounted for 16 % of the group’s gross sales, a complete of two.3 billion euros. This is a rise of three.7 % in comparison with the earlier yr. Full-year gross sales for 2024 have been round eight billion euros, and working revenue was 570 million euros. Analysts on the non-public financial institution Berenberg estimated the worth of the ice cream division at 12.8 billion euros just a few months in the past, however the determine of 15 billion euros can be circulating within the business. The IPO will present how a lot the corporate is definitely value.

It is at present troublesome for shareholders to evaluate whether or not shopping for the brand new Magnum shares is definitely worthwhile. But there’s a lot to recommend that Magnum could possibly be attention-grabbing for traders. The gross sales development appears to underline what analyst Radu additionally sees because the ice cream firm’s decisive benefit over its rivals: Both Magnum and Ben & Jerry’s have established themselves within the minds of many individuals as manufacturers that you just flip to whenever you need to deal with your self to one thing particular – a luxurious product, so to talk. This advertising and marketing can lead to the next value.

Magnum says it plans to ship to much more factors of sale and develop new merchandise. The analysts at non-public financial institution Berenberg assume that Magnum can additional enhance its gross sales. Nevertheless, the enterprise space is just not with out dangers that shareholders ought to pay attention to.

The firm’s well-being is determined by a single product, specifically ice cream. Raw material-related value will increase can have a very sturdy affect, for instance when excessive climate occasions have an effect on the harvest and assets turn into scarce. Cocoa has turn into way more costly lately. The extra the uncooked supplies value, the earlier Magnum has to cross this on to clients and lift costs accordingly. The consequence could possibly be a decline in demand. Analysts at Berenberg additionally warn about this.

The same threat exists throughout extreme financial crises, wherein individuals might favor to save lots of their cash quite than spend it on costly sweets, particularly since ice cream is just not an on a regular basis product. Added to that is rising well being consciousness, which can lead to customers lowering their sugar consumption. However, analyst Diana Radu sees little menace to Magnum’s enterprise mannequin right here, because the model has positioned itself as an “indulgence for special occasions”. Magnum can be growing lower-calorie snacks. Whether they’re actually as wholesome as marketed stays to be seen.

A 3rd uncertainty for Magnum is the present developments surrounding Ben & Jerry’s, the favored ice cream model that additionally belongs to the corporate. There are rumblings between Unilever and Ben & Jerry’s as a result of Ben & Jerry’s has taken a really clear place within the Middle East battle. The founding father of Ben & Jerry’s needed to assist the Palestinians along with his personal ice cream taste. Although he bought his firm to Unilever years in the past, he’s nonetheless concerned and is thought for expressing himself politically. Unilever did not need the brand new ice cream taste. If the battle escalates additional, it may even have penalties for Magnum as a complete. Investors must maintain all of those dangers in thoughts when the inventory market bell rings for Magnum in just a few days.