To layoff 15 percent of worldwide workforce
- Author: Zachary Reyes Mar 02, 2017,
Mar 02, 2017, 2:13
Buck told analysts the chocolate and candy category is well positioned because it is "highly impulsive" with "expandable consumption" and Hershey expects to benefit from the snacking trend in the USA that has people eating more frequently throughout the day.
Hershey is cutting about 15% of its global workforce, mostly outside of the US.
Hershey said the program "is created to improve overall operating profit margin through supply chain optimization, a streamlined operating model and reduced administrative expenses".
Hershey employs 18,000 globally and the restructuring could lead to pre-tax charges of $375 million to $425 million and savings of $150 million to $175 million by the end of 2019.
"Hershey has tremendous assets - its iconic brands, remarkable people and a history of executional excellence - that position the company well to deliver top- and bottom-line growth", Buck said in the statement. The layoffs will occur primarily outside of the United States, the company said.
Hershey operates eight factories outside the U.S. As of December, the company had 16,300 full time and 1,680 part-time employees worldwide.
But the company says the cuts are needed to continue driving net sales and profit.
The incoming president said the efforts should result in the company achieving its adjusted operating profit margin target of 22% to 23% by the end of 2019. Hershey has also been struggling with unfavorable currency exchange rates and declining sales in China.
Hershey has been beating Wall Street estimates with its recent earnings reports, and its stock is up 4.8% so far in 2017.