US cereal giant WK Kellogg has announced plans to close its Omaha, Nebraska, plant and scale back production at its Memphis facility in Tennessee.
It said the plans are consistent with a supply chain modernisation strategy announced at an investor day event last August.
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The Omaha plant will shut by the end of 2026, while production will be scaled back at its Memphis factory starting from late 2025.
The reorganisation will reduce the company’s headcount by more than 17%, around 550 people.
At the same time, the Raisin Bran, Special K and Frosted Flakes maker is planning to increase production at its Battle Creek, Michigan; Belleville, Ontario; and Lancaster, Pennsylvania plants, with planned spending of about $450m to $500m.
The reorganisation is expected to result in cumulative restructuring pre-tax charges of between $230m and $270m.
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By GlobalDataIn a statement accompanying the release of its Q2 results yesterday (6 August), CEO Gary Pilnick said: “Today’s announcement regarding modernising our supply chain marks a significant step forward in executing our strategy and enhancing WK Kellogg Co.’s long-term strength and resilience.
“These actions will help transform our supply chain and will allow us to enhance our production across a more reliable, agile, and cost-effective manufacturing network, supporting top-line delivery and driving margin expansion.”
WK Kellogg, the North America cereal business of packaged food giant Kellogg before it was spun off last October, posted sales of $672m for the second quarter, down 3.9% year-on-year. Net income was up from $27m to $31m but adjusted EBITDA was down from $89m to $78m.
The company forecast 2024 adjusted net sales to come in at the lower end of its prior forecast range of 1% growth to a 1% decline.
In February, Kellanova, the other company resulting from Kellogg’s spin-off of operations last year, set out plans to close two factories in North America and Europe as part of efforts to drive efficiency and increase productivity.
