Kellogg’s ‘Project K’ cuts 7 percent of workforce
Battle Creek-based Kellogg said Monday that it plans to trim its global workforce by 7 percent, with the breakfast-foods maker citing weaker-than-expected sales for the year.
The maker of brands such as Frosted Flakes and Eggo waffles has 31,000 employees, which suggests the company plans to cut about 2,170 jobs, according to FactSet.
"Some employee notifications will take place this week," the company said in a statement.
Kellogg said the workforce reductions will take place by the end of 2017, along with plant consolidations and other cost-cutting measures it's dubbing "Project K."
“Project K is a significant, four-year global program that will re-shape our cost structure and serve as a catalyst for our growth strategy," said Kris Charles, a Kellogg Company spokesperson. "The likely outcome of this global initiative is that by the end of 2017, we estimate that Kellogg will have approximately 7 percent fewer employees worldwide than we do today.
"We aren’t disclosing further specifics about Project K," Charles added. "However, this isn’t a one-size-fits-all initiative. Each of Kellogg Company’s geographic regions and functions will implement the initiatives that make the most sense to enhance efficiency and effectiveness. It’s premature to estimate any potential impacts in Michigan at this time.”
U.S. Morning Foods division
Kellogg has been struggling to boost cereal sales in its flagship North American market. Although cereal remains a huge business, Americans have a growing number of options in the morning and are increasingly reaching for foods that they can eat on the go.
Kellogg said sales at its U.S. Morning Foods segment fell by 2.2 percent in the third quarter of fiscal 2013.
Some of Kellogg's other brands include Special K, Pop Tarts, All-Bran and Rice Krispies.
To expand into the salty snacks business, Kellogg bought Pringles chips last year.
The company is hoping that the chips will also give it a bigger presence overseas as well.
But in the latest period, Kellogg said sales in the U.S. snacks segment also fell by 2.5 percent.
Kellogg Co. said it earned $326 million, or 90 cents per share, in the quarter. Not including one-time items, it earned 95 cents per share, which was above the 89 cents per share Wall Street expected.
Kellogg said it expects earnings per share for the year to be toward the lower end of its previous forecast.
A year ago, the company earned $318 million, or 89 cents per share.
Revenue slipped to $3.72 billion and was short of the $3.73 billion analysts expected.
Kellogg's shares rose 1.5 percent to $63.25 in pre-market trading.