In an effort to save money, Kellogg's is cutting seven percent of its employee-base worldwide Bloomberg Businessweek reported Monday.
"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," John Bryant, chief executive officer Kellogg said in a statement.
The company's plans, which total 2,000 positions are part of its four year initiative entitled "Project K" to adapt to slow sales of its breakfast and snack products Bloomberg Businessweek reported. This will be done with pretax charges of $1.2 billion, and $1.4 billion.
It also has non-cash costs, which will be between $275 million and $325 million according to information from the company, Bloomberg Businessweek reported. The company also expects to save between $425 million and $475 million in 2018.
"It's not worth discounting if you're not driving volume," Brian Yarbrough, an analyst for Edward Jones and Co. in St. Louis, told Bloomberg Businessweek. "So you've got to retrench, you've got to look for cost savings, you've got to look for ways to be more productive, whether it's through the supply chain or manufacturing."
The company will also focus on boosting its growth, merging its facilities, and working to expand its regional brands worldwide.
The company also announced its adjusted earnings per share for the full-year will be smaller than its projected $3.75 to $3.84 numbers. Its sales will also grow four to five percent following a five percent prediction.
Kellogg's shares increased 3.5 percent to $64.48 Monday morning according to information the company Bloomberg reported. Sales increased 12 percent before this.
Snack sales throughout North America decreased 1.3 percent to $2.4 billion in the last fiscal quarter, with those in the United States decreasing 2.5 percent. Snack sales in Latin American increased 3.4 percent with those in Europe increasing 6.4 percent.
