Kellogg takes $35m hit, cuts jobs as part of Keebler, Famous Amos sale

19-Jun-2019 - Last updated on 19-Jun-2019 at 10:37 GMT

Kellogg's continues its ongoing worldwide restructuring plan. Pic: Kellogg's/©GettyImages/Olivier Le Maol

Kellogg Co said the divestiture of its cookie and fruit snack businesses is resulting in $35m in pretax charges, $20m of which are related to employee severance and termination benefits.

The cereal maker is cutting 150 jobs as part of the sale.

The Battle Creek, Michigan-based company sold its entire North American cookies unit – as well as its fruit snack, piecrust and ice cream cone businesses – to Nutella maker Ferraro in April for $1.3bn.

The deal comprises a significant portion of Kellogg’s North American snacks business, and includes the Keebler, Mother’s and Famous Amos brands, as well as the cookies manufactured for the Girl Scouts of the USA, plus Stretch Island and Fruity Snacks.

It is expected the transaction will close at the end of July 2019.

More focused

“This transaction will result in a smaller, more focused (North American) portfolio with fewer brands... requiring a simpler, more agile and rightsized organization,” said Kris Bahner, senior vice president for Global Corporate Affairs.

Last month, Kellogg announced it was taking similar steps in Europe that would result in charges of about $50m.

Like other packaged food companies, the company is struggling with surging expenses owing to higher transportation and raw material costs.

Kellogg posted a 25.4% drop in operating profit for its first quarter. Its cereal sales in North America also fell 5%, thanks to ‘continued category softness’ as consumers shift to more health-focused breakfast options.

Kellogg Co said it expects its worldwide restructuring plan to be completed by the end of 2020.