Kellogg GB profit 30% down after job cuts

The cereal manufacturer’s sales fell 10% – from £150M to £135M – in the year ending January 2, 2016. Pre-tax profit dropped from £21M to £15M, mainly due to a £10M pay-out on redundancies at one of its Wrexham factories in November 2015.

Kellogg staff numbers dropped by 90 over the year, including 39 job losses in production and 51 in administration, it explained. Staff wages and salaries fell from £53M to £40M, as it’s total workforce dropped from 985 to 895, according to the statement published on Wednesday (October 5).

‘Staff numbers dropped by 90’

Kellogg GB’s report said: “Within the European region and the UK in particular, a number of initiatives are progressing through various stages of execution – including reductions in employee numbers at the Wrexham and Manchester facilities.

“The directors expect the current level of business to be sustained for the foreseeable future.”

The company said its Project K scheme, launched in November 2013, was continuing to “serve as a catalyst for future growth”. The four-year programme would unlock annual cost savings of between £342M ($425M) and £382M ($475M), said the manufacturer.

‘Catalyst for future growth’

Kellogg recently appointed former the firm’s Russia general manager Dave Lawlor as its new md. His promotion followed the appointment of Oliver Morton as sales director.

Kellogg GB’s parent company, the Kellogg group, reported “good progress” in its second-quarter trading update in August, after posting a 0.3% rise in operating profit. Profit in North America, Asia and Venezuela improved compared with the previous year.

But the group’s sales in Europe hindered the company’s overall profit. Kellogg said the UK’s cereal market was largely the cause of European sales falling £16M.

The company-wide revenue of £2.5bn ($3.3bn) was down 6.6% year-on-year. However, Kellogg’s cost-cutting measures meant the company still slightly improved overall profits.

Meanwhile, Manchester factory manager Tony O’Brien explained to Food Manufacture how he used company cutbacks to make his site more efficient.