Hershey Co said it expects to cut its global workforce by about 15 percent, with the reductions coming mostly from hourly employees outside the US.
The Pennsylvania-based maker of Reese’s, Kit Kat and Twizzlers also cut its long-term sales growth forecast to between 2 and 4 percent, from the previous 3 to 5 percent.
Hershey, which gets the majority of its revenue from North America, attributed the lowered expectations to “changes in US shopping habits” and challenges overseas.
Photo: AP
The job cuts, which could come to about 2,700 workers, are part of Hershey’s plan to improve its operating profit margin over the next three years, and the company said it would share more details on the measures in the future.
Other major packaged food makers — including Coca-Cola Co, General Mills Inc and Kellogg Co — have been slashing costs as sales growth has slowed.
During a meeting with analysts in New York on Wednesday, Hershey CEO Michele Buck said that the chocolate and candy category is nevertheless well-positioned because it is “highly impulsive” with “expandable consumption.”
She said the company plans to benefit from the snacking trend in the US that has people eating more frequently throughout the day.
Hershey has already been trying to transform its portfolio of products to better take advantage of that behavior, particularly as people look for snacks that promise some sort of nutritional benefit.
For instance, the company recently introduced “snack mixes” that include its chocolates and ingredients like nuts and pretzel balls. It also acquired a meat jerky company in response to the demand for snacks with protein and said it would look for other acquisition opportunities.
JPMorgan analyst Ken Goldman said he believed many of the job cuts announced by Hershey would come from Shanghai Golden Monkey Food Joint Stock Co (上海金絲猴食品), a Chinese candy company Hershey acquired in 2014.
Hershey has reported declining chocolate sales at its China business in recent quarters.
Hershey is expecting pretax charges of up to US$425 million over the next three years as a result of its plan to improve the operating margin, which includes the costs of closing plants and offices, and other expenses related to job cuts.
The company operates eight factories and eight distribution centers outside the US.
As of December last year, it had about 16,300 full-time and 1,680 part-time employees worldwide.
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