ConAgra Foods To Cut 1500 Jobs, Move Headquarters To Chicago

(RTTNews) - Packaged foods company ConAgra Foods, Inc. (CAG) said Thursday that it plans to cut about 1500 jobs, or about 30 percent of its global office-based workforce, as part of a restructuring plan aimed at improving profitability and unlocking shareholder value. The company will also move its headquarters to Chicago, Illinois.

The Omaha, Nebraska-based maker of Chef Boyardee pasta, Hunt's ketchup and Peter Pan peanut butter noted that the job cuts exclude any impact from the planned divestiture of its private label operations. The company also said that plant positions not will be eliminated in connection with the restructuring.

ConAgra expects to incur total non-recurring restructuring charges of about $345 million, with substantially all of it expected to be cash charges, over the next two to three years.

ConAgra also expects to realize at least $300 million of efficiency benefits within the next three years, through reductions in SG&A as well as enhancements to trade spend processes and tools.

Of this, about $200 million in savings are expected to be derived from a combination of lower headcount and non-headcount costs through the adoption of zero-based budgeting, simplifying organizational structure, and outsourcing technology as well as back office functions.

The company expects to realize $100 million of efficiency benefits from enhancements to trade spend processes and tools.

ConAgra expects the restructuring plan to provide a modest benefit to fiscal year 2016 earnings.

The company anticipates to realize more than half the savings by the end of fiscal year 2017, with the balance to be achieved in fiscal year 2018. These savings are in addition to the about $150 million in cost reductions achieved by the company over the past two years.

ConAgra noted that the decision to move headquarters to Chicago was solely based on the strategic needs of its business and was not a city-vs-city exercise.

Beginning in the summer of 2016, about 700 employees will be located in the new offices in the city's Merchandise Mart, including the company's senior leadership team and certain functions of the Consumer Foods business that are currently located in Omaha, Nebraska, as well as Naperville, Illinois.

However, the company will continue to maintain a significant presence in Omaha, including about 1,200 employees within key administrative functions, as well as research & development and supply chain management.

In mid-September, ConAgra reported a loss for the first quarter, weighed down by a hefty impairment charge at its Private Label operations that has been reclassified as discontinued operations due to the company's plans to exit the business.

CAG closed Wednesday's trading at $40.51, up $0.45 or 1.12 percent on a volume of 3.42 million shares.