Kraft Heinz Announces Turnaround Plan to Cut $2 Billion in Costs
Kraft Heinz unveiled a turnaround plan today that will cut $2 billion in costs through 2024.
As part of its plan, the company said it is selling part of its cheese business to Lactalis for $3.2 billion, according to CNBC. Breakstone’s, Polly-O, Athenos, Hoffman’s, Knudsen and Cracker Barrel are included in the deal and accounted for $1.8 billion in net sales over the past year.
The French company will also be licensing the Kraft cheese brand. According to reports, the deal is expected to close in the first half of 2021 and Kraft Heinz will use the proceeds of the deal to pay down its debt.
Kraft Heinz CFO Paulo Basilio expects the company’s adjusted earnings per share to “be diluted by 5% as a result of the sale.” “We are committed to returning Kraft Heinz to consistent growth on both the top and bottom lines,” he added.
Kraft Heinz has been struggling with its product portfolio in recent years as consumers shop the perimeter of grocery stores for fresh foods. The coronavirus pandemic has helped increase sales and the company’s household penetration has increased by 70%, according to Carlos Abrams-Rivera, Kraft Heinz’s U.S. head.
As a result, Kraft Heinz is looking at its portfolio by category to determine whether it will focus on growing, energizing or stabilizing its sales.