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Kraft to Shut Plants, Slash 8,000 Positions

January 31, 2006|From Associated Press

Kraft Foods Inc. said Monday that it would eliminate 8,000 more jobs, or about 8% of its workforce, and close as many as 20 production plants as it broadened an ongoing restructuring effort.

The nation's largest food manufacturer said the cuts would save an additional $700 million in annual costs, atop a targeted $450 million in savings it already had hoped to achieve through a restructuring that began in January 2004.

Northfield, Ill.-based Kraft already had announced closures of 19 production facilities and the elimination of 5,500 jobs. Kraft said Monday that those efforts were on track, but it was expanding the restructuring plans to include more cuts.

The company said it intended to close plants in Australia and Hoover, Ala., but did not announce the other facilities it planned to close. Kraft also said it would trim 10% of its brand portfolio.

Kraft said the additional cuts would cost the company $2.5 billion, bringing the cost of its overall restructuring to $3.7 billion.

Kraft announced the moves Monday while reporting fourth-quarter earnings results that beat analysts' expectations.

Earnings for the October-December period totaled $773 million, or 46 cents a share, up from $628 million, or 37 cents a share, a year earlier. Revenue rose to $9.66 billion from $8.78 billion a year earlier.

Excluding 10 cents in restructuring charges, Kraft posted a 56-cent operating profit. Wall Street had expected a profit of 53 cents a share, based on the consensus estimate of analysts polled by Thomson Financial.

The job and plant cuts and the earnings were announced after the market closed for the day. Kraft had risen 71 cents, or 2.4%, to $30. Its shares added an additional 75 cents, or 2.5%, in after-hours trading.

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