General Mills to Cut 850 Jobs, Roughly 425 in MN
General Mills, Inc., plans to cut 850 jobs worldwide, about half of which are in Minnesota, the Golden Valley-based food manufacturer announced Tuesday.
The company said that the cuts are part of a plan to lower costs and “improve organizational effectiveness.”
General Mills employs about 35,000 globally, including about 5,500 in Minnesota. The cuts will mostly affect administrative and support positions, and they include layoffs as well as open jobs that will remain unfilled, General Mills spokeswoman Kirstie Foster told Twin Cities Business in a Tuesday e-mail.
The company said it will invest its savings from the job cuts to support future growth strategies and “to accelerate innovation across General Mills’ global business platforms.”
During General Mills’ third-quarter earnings call in March, CEO Ken Powell told investors that the company has recently experienced “a particularly challenging operating environment with commodity inflation the highest we’ve seen in 30 years.” In addition, slow economic recovery has kept many consumer budgets tight, he said.
The company’s net income during the first three quarters of its current fiscal year totaled $1.2 billion, representing a 16 percent decline from the same period a year earlier. Net income for the third quarter that ended February 26 totaled $391.5 million, almost flat with $392.1 million a year earlier. Meanwhile, sales for both the third quarter and the first three quarters of the year rose about 12 percent.
In its Tuesday announcement about the job cuts, the company said that its previous earnings forecast for the full fiscal year hasn’t changed, and it expects to earn between $2.53 and $2.55 a share.
Meanwhile, the company plans to invest about $13 million in new production equipment as part of its restructuring plan. It expects the plan to result in total pretax charges of about $109 million, including the investment in new equipment and severance packages for the laid-off employees.
The company said about $94 million of those charges will be recorded in its fiscal fourth quarter, which ends Sunday. The rest will be recorded in its next fiscal year.
General Mills is the eighth-largest public company in Minnesota based on revenue, which totaled $14.8 billion for the fiscal year that ended in May 2011.