Kraft Heinz to axe 2,500 jobs in North America

13 August 2015

The third-largest food company in the US and the fifth-largest worldwide, Kraft Heinz Company, the new food and beverage giant formed through the merger of Kraft Foods Group and H J Heinz Co last month, has announced 2,500 job cuts in line with its strategy to cut costs.

The job cuts, which represent about 5 per cent of the company's total staff, will take place in the US and Canada.

A company spokesman Michael Mullen said the layoffs have been made to ''ensure we are operating as efficiently and effectively as possible.''

''It was a very difficult, but necessary, decision,'' he added.

About 700 of the job cuts will take place at the Kraft headquarters in Northfield, Illinois.

The company has not specified where the other cuts were taking place, although it said none of the positions involved factory workers.

Affected employees will be paid a minimum of six month's severance, Mullen said.

The merger of Kraft and Heinz, which was completed on 2 July, has created the third-biggest food and beverage company in North America and the fifth-biggest in the world with revenue targets of around $28 billion. The combination produces more than 200 iconic global brands of food and beverages and sells them in over 200 countries.

Warren Buffet's investment arm Berkshire Hathaway and Brazilian private equity firm 3G Capital had teamed up to buy Heinz in 2013. Collectively, they own 51-per cent stake in Kraft Heinz.

3G is known for its tough cost -cutting measures and layoffs to make the businesses it acquire more profitable. Between April 2013 and December 2014, it had cut over 7,400 positions in Heinz.

Just two days ago, the companies reported a fall in their sales for the second quarter, the final quarter before the merger.

Sales of Kraft fell 4.9 per cent to $4.52 billion due to weaker demand while Heinz revenue was down 4.1 per cent at $2.62 billion on account of strong dollar.

Kraft's net income was up $551 million over last year, while Heinz reported a $344-million loss for the same period.

Kraft Heinz has said that it expects to save about $1.5 billion in annual costs by the end of 2017.

''The company is focused on the difficult and challenging process of integrating our two businesses,'' Kraft Heinz's chief executive, Bernardo Hees, said in a statement.

"We have a lot of hard work ahead of us as we continue to design our new organisation, always putting our consumers first,'' said Hees.

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