NEW YORK (Reuters) – Campbell Soup Co will shed nearly 800 jobs as part of a series of cost cuts, which include exiting the Russian market, automating operations at a factory in Australia and closing one in the United States.
The company’s stock rose 0.8 percent in after-hours trading following the announcement on Tuesday.
The world’s largest soup maker has about 18,400 employees worldwide, including about 1,200 at its headquarters in Camden, New Jersey.
Campbell expects the moves to cost it about $75 million, to be recorded mostly in the fourth quarter of the current fiscal year. It expects to complete these moves in fiscal 2013.
Campbell said the changes should save it $60 million a year starting in fiscal 2012, with the savings rising to $70 million in fiscal 2014.
The announcement comes less than a week after Campbell officially named Denise Morrison as its new president and chief executive officer, replacing Douglas Conant, who will leave on July 31 after more than a decade at the helm.
Morrison said in a statement that as the new leadership team developed its strategic plan it examined all aspects of its business. It found that the Russia business, started in 2007, fell short of expectations.
“We believe that opportunities currently under exploration in other emerging markets, notably China, offer stronger prospects for driving profitable growth within an acceptable time frame,” Morrison said.
Campbell announced plans to enter the world’s largest soup-consuming markets, Russia and China, at the same time in 2007. The company has found enough success in China to expand distribution there, but has struggled in Russia, where consumers were at first suspicious about pre-made soups.
Two executives who were key at the time have also recently left the company. Larry McWilliams, former president of Campbell International, was replaced by Mark Alexander in October. Chris Delaney, former president of emerging markets, left Campbell after being shifted in April from president of Asia Pacific to a business development role. He was replaced earlier this month.
CUTTING COSTS, BOOSTING EFFICIENCY
Regarding the moves overall, Morrison said they will lower the company’s costs, improve manufacturing efficiency and help fund plans for growth.
Campbell will close its office in Moscow and exit the Russian market, resulting in the loss of 50 jobs.
Campbell also said it expects to have $40 million in capital expenditures over an 18-month period to automate packing operations at a plant in Virginia, Australia. About 190 jobs will be lost, it said.
Closer to home, Campbell, which also makes V-8 juice drinks and Pepperidge Farm Goldfish crackers, said it will close a factory in Marshall, Michigan, and shift production of ready-to-serve soups from a plant in Paris, Texas, to facilities in Napoleon, Ohio, and Maxton, North Carolina.
It will also outsource a larger portion of its U.S. retail merchandising activities to its current retail sales agent Acosta Sales and Marketing, a move that will result in the loss of 190 positions.
Campbell shares rose to $34.02 in after-hours trading from their close at $33.74 on the New York Stock Exchange.
(Reporting by Martinne Geller. Editing by Robert MacMillan, Gary Hill and Gunna Dickson)