New CEO looks to generate 'aggressive, run-rate cost savings of $1.5bn by the end of 2017'

Heinz has slashed almost a quarter of its workforce since April 2013, SEC filings reveal

By Elaine Watson contact

- Last updated on GMT

 Heinz's new yellow mustard is "off to a very good start", says the firm.
Heinz's new yellow mustard is "off to a very good start", says the firm.

Related tags: H. j. heinz company, Kraft foods, Ketchup

Heinz has slashed just under one quarter (23.8%*) of its workforce since April 2013 as part of a ‘restructuring and productivity’ drive at the ketchup giant, which was acquired by private equity firms 3G and Berkshire Hathaway in June 2013, and tied the knot with Kraft last month.

The figures emerged on Monday as Kraft and Heinz posted financial results for the second quarter of 2015, which ended just before The Kraft Heinz Company was formally established on July 2.

In a 10-Q SEC filing, The Kraft Heinz Company said 7,300 of the 7,600 Heinz employees who had been axed as part of its restructuring initiatives had left the company as of June 28, 2015.

However, CEO Bernando Hees did not say what job cuts might now be on the cards at Kraft  as he seeks to make good on his promise to “generate aggressive, run-rate cost savings of $1.5bn by the end of 2017”.  

While some senior level departures at Kraft were announced ​at the end of June (James Kehoe; Kim Rucker; Robert Gorski; Jane Hilk; Dave Ciesinski; Fred Paglia, and Chuck Davis) as Hees unveiled a new leadership team consisting primarily of Heinz executives, no formal announcements have been made since July 2.

Bernando Hees: Looking to generate "aggressive, run-rate cost savings of $1.5 billion by the end of 2017".

The fact that the new Kraft Heinz Chicago HQ at the Aon building at the top of Grant Park – to which staff will be moving in early 2016 - is much smaller than the current HQ at Northfield, IL, has also prompted speculation that the headcount will drop accordingly.

Asked what staff have been told, Michael Mullen, SVP, Corporate & Government Affairs, told FoodNavigator-USA: “We have told employees that there will be changes moving forward and that we are dedicated to communicating with them openly, often and honestly.”

He added: “We will have co-headquarters in Pittsburgh and Chicago with corporate functions in both locations.”

Q2 results: Kraft revenues -4.9%; Heinz revenues -4.1%

In the three-months to June 28, Heinz’s​ net sales fell 4.1% to $2.62bn due to the negative impact of foreign exchange translation and the sale of a frozen food business in the UK (ketchup & sauces +3.2%, meals & snacks -6.9%, infant nutrition -15.1%, 'other' -27.2%); while it posted a net loss of $164m. However, organic net sales rose 5.9%, driven primarily by higher pricing.

Kraft Heinz merger
The Kraft Heinz Company has leapfrogged Coca-Cola to become the third largest food and beverage firm in North America behind PepsiCo and Nestlé

At Kraft​, meanwhile,​ revenues fell 4.9% to $4.52bn (cheese -2.8%; refrigerated meals +0.8%; meal solutions -9%, beverages & snack nuts -6.3%, international -7.5%, and ‘other’ -6.3%); while net income rose 14.3% to $551m.

The Kraft Heinz Company is the third largest food and beverage firm in North America behind PepsiCo and Nestlé.

Its brand stable includes Heinz Ketchup, Classico, Ore-Ida, TGI Friday’s, Weight Watchers, Heinz Beanz, and Smart Ones, Kraft, Velveeta, Jell-O, Oscar Mayer, Philadelphia, Cool Whip, Kool-Aid, Capri-Sun, MiO, Planter’s, and Lunchables.

*Heinz employed roughly 31,900 employees in April 2013 and has since announced plans to cut 7,600 jobs - or 23.8% of its workforce.

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