Kraft Foods to cut 1,600 North American positions as company prepares to split its global snacks, North American grocery businesses

Nevin Barich

NORTHFIELD, Illinois , January 17, 2012 (press release) – Kraft Foods Inc. will cut 1,600 positions in North America as it prepares to split its business in two.

The Northfield, Ill.-based food company said Tuesday that it plans to eliminate the positions throughout the U.S. and Canada during the coming year. The cuts will be made among its sales, corporate and other business units. About 20 percent of the job eliminations are currently open positions.

Kraft has roughly 127,000 employees worldwide, including 46,500 in North America.

The company announced in August that it would split into two independent companies: a global snacks business and North American grocery business. Kraft said the moves are needed to help the businesses run more effectively.

The bulk of the cuts — about 40 percent — will be made among sales positions. Kraft plans to contract sales for its grocery business to two agencies: Acosta Sales & Marketing for its grocery store and big box retailer sales and Crossmark for convenience store sales.

Kraft also said that it is consolidating its other offices across the country, where some management, researchers and other employees work. It plans to halve the number of U.S. management centers to two from four.

The company's offices Madison, Wis., where its Oscar Meyer business is based, will remain open. Its East Hanover, N.J. facilities, where its snacks business is based, will become the U.S. headquarters for its global snacks business. The employees in its Tarrytown, N.Y., offices, where its beverage business is based, are moving to the greater Chicago area. And its cheese, dairy and grocery offices in Glenview, Ill., will close.

Kraft did not cut jobs at its manufacturing facilities at this time. But the company said in a statement that with the pending split, it is still reviewing this part of its business to consider what is what's best for both new companies.

"Making these tough choices is never easy, and we recognize the impact these changes will have on many of our people and their families," Tony Vernon, executive vice president and president of Kraft Foods North America and CEO of the future grocery company, said in a statement. "But our plan for a more nimble company, combined with the current economic and competitive pressures, led us to this point. Taking the necessary steps now will enable us to continue investing in our beloved brands to drive growth."

Kraft also announced Tuesday that it expects to earn at least $1.95 per share for 2011, or $2.28 per share after adjusted for the acquisition, spin-off and other costs. Analysts polled by FactSet forecast that Kraft would earn $2.29 per share. Kraft said its revenue will increase 10 percent over the prior year, which would equate to revenue of $54.13 billion for the fiscal year. Analysts forecast revenue of $54.56 billion, on average.

Shares of Kraft rose 58 cents to $38.35 in afternoon trading. Earlier shares set a 52-week high of $38.53. They traded at a year low of $30.21 last January.

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