Kraft Heinz Announces 2,500 Job Cuts In Same Week as Sales Declines Reported
14 Aug 2015--- The newly formed Kraft Heinz Company, which was orchestrated by 3G and Berkshire Hathaway, has announced job losses amounting to 2,500 jobs, or 5% of its global workforce.
The news of job cuts comes as no surprise from a company that is renowned for aggressively cutting personnel in an effort to cut costs. Many of the roles of the two companies are duplicated, which gives opportunities for streamlining in many areas. 3G previously announced plans to make $1.5bn savings from Kraft Heinz’s annual budget sheet.
Earlier this week, Kraft Heinz announced results from both the companies for the final quarter before the merger completed. Both companies experienced a sales decline, with Kraft experiencing a decline of 4.9% and Heinz 4.1%.
Sales at Kraft fell due to weak demand for its beverages, a result of fewer promotions versus the year-earlier period, while the strong dollar hurt sales at Heinz.
Kraft's net income rose to $551 million, or 92 cents per share, in the second quarter ended June 27, from $482 million, or 80 cents per share, a year earlier.
Heinz organic net sales grew 5.9%, driven by higher pricing across all segments and comparisons with SAP implementation in the prior
Net pricing increased by 4.2 percent driven by higher pricing across all segments, primarily due to Latin America. Volume increased 1.7 percent driven by higher inventory stock at US retailers in the first quarter of 2014 prior to the implementation of SAP, as well as raw material and packaging supply constraints in Venezuela. These volume gains were partially offset by volume declines due to the timing of the Ramadan festive season in Indonesia, volume declines due to reduced trade promotions in Russia, product rationalization in Europe, and category declines in Italy.
“The company is focused on the difficult and challenging process of integrating our two businesses,” said Kraft Heinz CEO Bernardo Hees. “We have a lot of hard work ahead of us as we continue to design our new organization, always putting our consumers first.”
