May 4 (UPI) — Kraft Heinz will cut 5,150 jobs and close six factories, laying off 13 percent of its workforce, in a bid to further cut costs at one of the world’s largest packaged food companies.
The decision is the latest in a series of aggressive cost-cutting maneuvers by the company, which merged in 2015 amid pledged to make both brands more efficient.
The company announced the cuts a day after it failed to meet analysts’ revenue and earning projections for the first quarter of 2017. Company executives blamed slumping consumption for falling short of expectations for a fourth time in the last five quarters.
Analysts told Bloomberg Kraft Heinz needed to continue expanding its brand offerings to grow revenue in a difficult market for packaged foods. The company’s bid to buy European company Unilever failed after Unilever executives feared a “culture clash” between its socially conscious brands and the reputation Kraft Heinz has developed for deep cost cutting.
Heinz, which is backed by the private equity firm 3G and Warren Buffett‘s Berkshire Hathaway, merged with the publicly traded Kraft in 2015. About 70 percent of the company’s sales are generated by the namesake condiment brands, Velveeta cheese and Oscar Meyer hot dogs.
Analysts said the company will need to broaden its horizons, and not just cut costs, in order to reverse flagging revenues.
“They need to show that they’re more that just a financial engineer — that they can run a food business in a challenging environment,” said Ken Shea, a Bloomberg analyst. “The jury is still out.”