Kellogg to cut global staff by 7pc after sales decline
Kellogg, the world's largest maker of breakfast cereals, said it would cut about 7pc of its workforce and slash capacity by 2017, after reporting another quarterly decline in sales in its cereals business.
Shares in the maker of Corn Flakes rose 2pc in early trading on the New York Stock Exchange.
Kellogg reported a better-than-expected third quarter adjusted profit on September on 28, helped by cost cuts.
Its cereals business, whic sells Corn Flakes, Chocos and Eggo Waffles, among other iconic brands, is fighting competition from private-label cereals.
Increasing popularity of yoghurt, frozen egg sandwiches and other breakfast items has also hit the business. Sales at Kellogg's US morning foods business, including cereals, fell 2.2pc in the third quarter.
The job cuts are a part of a new four-year cost-cutting programme called Project K to strengthen existing businesses in its core markets and increase growth in developing markets.
Kellogg had about 31,000 employees globally by 2012's end.
Project K, which includes eliminating excess capacity and consolidating supply-chain infrastructure, is expected to result in pre-tax charges of $1.2bn (€880m) to $1.4bn (€1bn), the company said.
Kellogg forecast full-year adjusted earnings at the low end of its previous estimate of $3.75-$3.84 per share, citing weaker-than-expected sales in certain food categories.
The company cut its 2013 revenue growth forecast to 4-5pc from 5pc. Net income rose to $326m, or 90 cents per share, in the third quarter from $318m, or 89 cents, a year ago.
Excluding certain integration costs and expenses related to Project K, Kellogg earned 95 cents per share. Analysts on average had expected 89 cents.
The company, which also makes Keebler cookies, said revenue was flat at $3.72bn, in line with Wall Street estimates.
Kellogg shares were trading at $63.50 just after the opening. (Reuters)