UPDATED - Kellogg has announced a new cost-cutting program called Project K that will see it eliminate 7% of its workforce by 2017, with some cuts beginning immediately.
According to FactSet, Kellogg has 31,000 employees, suggesting the company plans to cut about 2,170 jobs.
The Battle Creek, Michigan-based firm - which posted flat third quarter sales (at $3.72bn) and net earnings up 3% to $326 million - said Project K would involve consolidating certain facilities/eliminating excess capacity - particularly in the US cereals sector; and consolidating common processes and business services across multiple regions and functions.
CEO John Bryant said: "We are making the difficult decisions necessary to address structural cost-saving opportunities which will enable us to increase investment in our core markets and in opportunities for future growth.”
Asked when and where the axe would fall, a spokeswoman said: “We don’t have further specifics about Project K to share at this time, 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 any geography at this time.”
In North America, net sales decreased by 1.3% to $2.4bn, with declines in Morning Foods (-2.2%) and Snacks (-2.5%) partially offset by gains in the Specialty segment.
While recent launch Raisin Bran with Omega-3 performed well along with Pop Tarts, Special K Protein and Special K Flatbread sandwiches, Kellogg reported a "slower-than-expected recovery" in its Kashi brand and "continued challenges in the adult segment of the portfolio", Bryant told analysts in a conference call.
However, Special K Nourish was "off to a good start", claimed Bryant, while the new drinkable breakfast to go shakes were also delivering "encouraging initial results".