Breakfast Foods / Business Strategies

Kellogg Signals Layoffs in Europe

By Pan Demetrakakes, Senior Editor

May 21, 2019

Kellogg is preparing for a retrenchment of its European business that will include job and contract terminations and relocation costs, according to a filing with the U.S. Securities and Exchange Commission.

In the May 19 filing, the company announced “a proposed reorganization plan for the European business designed to simplify the organization, increase organizational efficiency, and enhance key processes.” The plan will involve a charge of $50 million, of which $33 million will be employee-related costs that include “severance and other termination benefits.” The remaining $17 million “will primarily consist of charges related to relocation, third party legal and consulting fees, and contract termination costs,” the filing states.

Kellogg had $2.35 billion in European regional sales last year, which came to about 17% of total sales. Organic net sales in Europe were down 3.6% last year, and “currency-neutral adjusted operating profit” for the region was down 3.7%.

Kellogg has manufacturing facilities in European countries including the UK, Belgium, Spain, Austria and Poland. In its latest annual report, the company noted that Brexit, Great Britain’s impending exit from the European Union, could increase Kellogg’s cost of goods sold through new tariffs.

Earlier this spring, Kellogg agreed to sell its cookie business to Italy’s Ferrero Group.