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General Mills Plans to Restructure, Cut 400 to 600 Jobs
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General Mills Inc. (GIS - Free Report) announced a restructuring plan at the close of its 150th anniversary celebrations. The maker of Cheerios, Kix and Lucky Charms, which has been struggling with weak sales in recent times, intends to streamline its portfolio that will eliminate an executive position along with hundreds of jobs.
As part of the reorganization, General Mills is eliminating the post of international chief operating officer that is currently held by Christopher O'Leary. Also, the restructuring will include the laying off of approximately 400–600 employees worldwide, subject to consultation with employees and employee representatives in locations as required.
Starting Jan 1, 2017, the company will split into four key business groups -- North America Retail (U.S. Retail & Canada), Europe & Australia, Asia & Latin America, Convenience Stores & Foodservice. These groups will report directly to President and Chief Operating Officer Jeff Harmening who took over the company’s global operations earlier this year.
In the words of Harmening, "The capability investments and savings generated by these changes will help us deliver our fiscal 2018 adjusted operating profit margin target of 20%."
The latest reshuffle is one of General Mills’ series of moves adopted in recent years, namely, "Project Century" and "Project Catalyst" that have slashed over 3,000 jobs as of mid-2015.
Growth Plans
Apart from restructuring its global operations into four key divisions, the company has other plans as well.
General Mills is aligning its current dairy strategic brand unit or SBU with this new global organization structure. Notably, in its recently released third-quarter results, General Mills said that sales fell 7% as its yogurt business took a hit in the U.S. France-based Dairy SBU will now focus to explore new opportunities to drive growth and innovation for the dairy platform globally. General Mills holds the second position globally in both yogurt and super-premium ice cream, courtesy of the Yoplait and Häagen-Dazs brands.
Again, the company expects to "enhance its growth capabilities in several areas, including strategic revenue management (SRM), e-commerce, and marketing innovation, and intends to augment its current talent with external expertise in these areas over the next several months."
What Good Does It Hold for General Mills?
General Mills is currently pursuing several multi-year restructuring initiatives focused at improving operational efficiency to generate cost savings and support its key growth strategies. In fiscal 2015, the company generated combined savings of $75 million from Project Century and Catalyst. These projects coupled with Project Compass and administrative cost reductions from zero-based budgeting generated cost savings of $350 million in fiscal 2016 and are expected to generate savings of $600 million by fiscal 2018.
However, the company needs to focus on increasing sales apart from just generating savings through these initiatives.
It is important to note here that General Mills’ shares have outperformed the Zacks categorized Food-Miscellaneous/Diversified industry so far this year, with the stock rising 6.02% versus 2.31% growth seen by the broader market.
Zacks Rank & Key Picks
General Mills currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the industry include Mondelez International, Inc. (MDLZ - Free Report) , Ingredion Inc. (INGR - Free Report) and Lancaster Colony Corp. (LANC - Free Report) .
Full-year 2016 earnings for Mondelez are expected to grow 11.4%.
Ingredion is likely to witness 20.1% growth in full-year 2016 earnings.
Fiscal 2016 earnings for Lancaster are expected to rise 7.3%.
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General Mills Plans to Restructure, Cut 400 to 600 Jobs
General Mills Inc. (GIS - Free Report) announced a restructuring plan at the close of its 150th anniversary celebrations. The maker of Cheerios, Kix and Lucky Charms, which has been struggling with weak sales in recent times, intends to streamline its portfolio that will eliminate an executive position along with hundreds of jobs.
GENL MILLS Price
GENL MILLS Price | GENL MILLS Quote
The Plan
As part of the reorganization, General Mills is eliminating the post of international chief operating officer that is currently held by Christopher O'Leary. Also, the restructuring will include the laying off of approximately 400–600 employees worldwide, subject to consultation with employees and employee representatives in locations as required.
Starting Jan 1, 2017, the company will split into four key business groups -- North America Retail (U.S. Retail & Canada), Europe & Australia, Asia & Latin America, Convenience Stores & Foodservice. These groups will report directly to President and Chief Operating Officer Jeff Harmening who took over the company’s global operations earlier this year.
In the words of Harmening, "The capability investments and savings generated by these changes will help us deliver our fiscal 2018 adjusted operating profit margin target of 20%."
The latest reshuffle is one of General Mills’ series of moves adopted in recent years, namely, "Project Century" and "Project Catalyst" that have slashed over 3,000 jobs as of mid-2015.
Growth Plans
Apart from restructuring its global operations into four key divisions, the company has other plans as well.
General Mills is aligning its current dairy strategic brand unit or SBU with this new global organization structure. Notably, in its recently released third-quarter results, General Mills said that sales fell 7% as its yogurt business took a hit in the U.S. France-based Dairy SBU will now focus to explore new opportunities to drive growth and innovation for the dairy platform globally. General Mills holds the second position globally in both yogurt and super-premium ice cream, courtesy of the Yoplait and Häagen-Dazs brands.
Again, the company expects to "enhance its growth capabilities in several areas, including strategic revenue management (SRM), e-commerce, and marketing innovation, and intends to augment its current talent with external expertise in these areas over the next several months."
What Good Does It Hold for General Mills?
General Mills is currently pursuing several multi-year restructuring initiatives focused at improving operational efficiency to generate cost savings and support its key growth strategies. In fiscal 2015, the company generated combined savings of $75 million from Project Century and Catalyst. These projects coupled with Project Compass and administrative cost reductions from zero-based budgeting generated cost savings of $350 million in fiscal 2016 and are expected to generate savings of $600 million by fiscal 2018.
However, the company needs to focus on increasing sales apart from just generating savings through these initiatives.
It is important to note here that General Mills’ shares have outperformed the Zacks categorized Food-Miscellaneous/Diversified industry so far this year, with the stock rising 6.02% versus 2.31% growth seen by the broader market.
Zacks Rank & Key Picks
General Mills currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the industry include Mondelez International, Inc. (MDLZ - Free Report) , Ingredion Inc. (INGR - Free Report) and Lancaster Colony Corp. (LANC - Free Report) .
All three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Full-year 2016 earnings for Mondelez are expected to grow 11.4%.
Ingredion is likely to witness 20.1% growth in full-year 2016 earnings.
Fiscal 2016 earnings for Lancaster are expected to rise 7.3%.
"Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>