Campbell to Exit Russian Market
Campbell will close its office in Moscow, eliminating approximately 50 positions, and conduct an orderly windup of its business in Russia.
6/30/2011 --- Campbell Soup Company has announced a series of initiatives to improve supply chain efficiency and reduce overhead costs across the organization. The company also announced its intent to close its office in Moscow and exit the Russian market.
Campbell expects to eliminate approximately 770 positions in connection with these initiatives and to incur aggregate pre-tax costs of approximately $75 million, nearly all of which will be recorded in the fourth quarter of this fiscal year. The initiatives are expected to be completed in fiscal 2013. They are expected to generate annual pre-tax savings of approximately $60 million beginning in fiscal 2012, increasing to approximately $70 million in fiscal 2014.
The actions planned include the following:
• To improve the efficiency of its supply chain, Campbell will invest in a new system to automate packing operations at its biscuit plant in Virginia, Australia. This investment, which includes approximately $40 million of capital expenditures, will occur over an 18-month period and will result in the elimination of approximately 190 positions, subject to union and employee consultations.
• In the U.S., Campbell will improve asset utilization by shifting production of ready-to-serve soups from its plant in Paris, Texas, to its facilities in Napoleon, Ohio and Maxton, N.C., both of which already produce ready-to-serve soups. The Paris plant will continue to produce other "Campbell's" soups along with sauces and beverages. Manufacturing of Campbell's microwavable "Soup at Hand" products will be consolidated at the Maxton plant, and the company will close its manufacturing facility in Marshall, Mich.
• Campbell will reduce its salaried workforce by approximately 510 positions around the world, including approximately 130 positions at its world headquarters in Camden. As part of this initiative, Campbell will outsource a largerportion of its U.S. retail merchandising activities to its current retail sales agent Acosta Sales and Marketing, and eliminate approximately 190 positions. The company expects that this action will enhance merchandising effectiveness and coverage for its U.S. customers.
• Campbell will close its office in Moscow, eliminating approximately 50 positions, and conduct an orderly windup of its business in Russia.
Denise Morrison, Chief Operating Officer and CEO Elect, said, "The steps we are announcing will help us continue to lower our costs and helpfund our plans to drive the growth of the business. The supply chain initiatives will enable us to improve manufacturing efficiency and further adjust the utilization of our assets to evolving consumer demand. While a workforce reduction is always a verydifficult decision, these actions will streamline our organization and improve the level of coverage and theeffectiveness of our sales merchandising activities."
Morrison continued, "As part of the development of our strategic plan, our leadership team, in consultation with the Board of Directors, has been examining all aspects of our business, including our currentemerging market operations. Though Russia remains an attractive potential growth market, the results of the business we launched in that market in September 2007 have fallen short of original expectations. We believe that opportunities currently under exploration in other emerging markets, notably China, offer stronger prospects for driving profitable growth within an acceptable time frame."
