General Mills to Cut Jobs as It Closes Plants World-Wide -- Update
July 21 2016 - 5:30PM
Dow Jones News
By Annie Gasparro
General Mills Inc. said it is shedding an additional 1,400 jobs,
citing lagging demand for some products including Progresso soup
that have fallen out of favor with consumers seeking more natural
ingredients.
The latest job cuts are part of a yearslong effort to slash
expenses, and they mark a more than 10% reduction in its workforce
since spring 2014.
Several packaged-food companies have been retrenching. Kellogg
Co., Mondelez International Inc. and Campbell Soup. Co. have
reduced their factory capacity for foods like cookies, cereal or
soup in recent years.
"Consumers are increasingly seeking products that match their
personal definition of real food, and that can mean foods that are
less processed and have simple labels with recognizable
ingredients," or it can mean more protein, whole grains or
gluten-free, said General Mills Chief Executive Ken Powell said at
an investor conference last week.
Since 2014, General Mills has revealed plans to cut some 3,500
jobs at factories and its headquarters, not including Thursday's
announcement.
The maker of Cheerios cereal, Häagen-Dazs ice cream and Annie's
Homegrown macaroni and cheese has grown over the past 150 years to
$16.6 billion in annual sales, making it one of the nation's
biggest food manufacturers. General Mills' operating profit margin,
when adjusted for items affecting comparability, is the highest it
has been in years, thanks to its various cost-cutting
initiatives.
But in fiscal 2016, General Mills' sales fell for the second
year in a row, down 6%. And some of General Mills' biggest brands,
especially cereal and Yoplait yogurt, are facing stubborn sales
declines, despite the company's efforts to revive the
businesses.
For investors, General Mills' latest move could increase
confidence that it will continue to improve its profitability. But
some analysts caution that cost-cutting can only get a company so
far.
"This is a reflection of the pressure they've been under. It
gives a one-time cost-savings lift, but it doesn't really solve
anything looking ahead," said Michael Lavery, food analyst at
investment group CLSA. "It doesn't give them the top-line growth
they need."
Thursday's job cuts will involve closing General Mills'
Vineland, N.J., facility that makes Progresso soup -- and was
featured in a soup commercial last fall -- potentially affecting
370 jobs.
A spokeswoman said the soup aisle has been challenged for years,
but Progresso remains relevant to General Mills.
The company also said it reached a deal to sell its 180-person
plant in Martel, Ohio, which produces dry mixes for the company's
convenience stores and food-service segment, for about $18 million
in cash.
Overseas, General Mills will close its snacks-manufacturing
facility in Marília, Brazil, and will stop producing meals and
snacks at its facility in São Bernardo do Campo, Brazil, affecting
420 jobs. In China, it will stop production of fruit snacks,
eliminating 440 positions.
"Our snacks business in greater China has been underperforming
for some time. Market conditions, brand position and the relatively
low priority of snacks in our China portfolio have all played a
role," the spokeswoman said.
The Minneapolis-based food maker had 39,000 full- and part-time
employees at the end of May.
--Austen Hufford contributed to this article.
Write to Annie Gasparro at annie.gasparro@wsj.com
(END) Dow Jones Newswires
July 21, 2016 17:15 ET (21:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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