CHICAGO – Kraft Foods Inc. (KFT), the nation's largest food manufacturer, said Monday it would eliminate 8,000 jobs, or about 8 percent of its work force, and close up to 20 production plants as it broadens an ongoing restructuring effort.
Kraft said the cuts would save an additional $700 million in annual costs, atop a targeted $450 million in savings it already had hoped to achieve through a restructuring that began in January 2004.
Northfield-based Kraft already had announced closures of 19 production facilities and the elimination of 5,500 jobs. Kraft said Monday that those efforts are on track, but said it is expanding the restructuring plans to include more cuts.
The company said it intends to close plants in Broadmeadows, Victoria in Australia and Hoover, Ala., but did not announce the other facilities it plans to close. Kraft also said it would trim 10 percent of its brand portfolio.
Kraft said the additional cuts would cost the company $2.5 billion, bringing the total cost of its overall restructuring to $3.7 billion.
Kraft announced the moves Monday while reporting fourth-quarter earnings results that fell short of analysts' expectations.
Earnings for the October-December period totaled $773 million, or 46 cents a share, up from $628 million, or 37 cents a share a year earlier. Revenue rose to $9.66 billion from $8.78 billion a year ago.
Wall Street had expected a profit of 53 cents a share, based on the consensus estimate of analysts polled by Thomson Financial.
When the maker of Kraft cheese, Nabisco crackers, Oscar Mayer meats and Post cereals announced its 2004 restructuring, there had just been a shake-up at top management that followed more than a year of disappointing sales and earnings.
At the time, Kraft executives blamed the poor results on American consumers' increased health concerns, which had put the entire packaged food industry under severe pressure to change quickly. The company's troubles cost marketing expert Betsy Holden her job of co-CEO and head of North American operations in December 2003. That left Roger Deromedi solely in charge.
The job and plant cuts and the earnings were announced after the market closed for the day. Kraft had risen 71 cents, or 2.4 percent, to close at $30 on the New York Stock Exchange. Its shares added another $1, or 3.3 percent, in after-hours trading.