General Mills (NYSE:GIS) on Tuesday said it would cut 850 jobs around the world and implement other cost savings in an effort to better weather rising commodity costs.
The Minneapolis food giant will take total restructuring charges of $109 million - about $94 million in the fourth quarter ending May 27 - reflecting severance charges and other one-time costs.
The maker of Cheerios, Yoplait and Betty Crocker products said savings from the changes will be reinvested in the company to support future growth strategies and accelerate innovation across General Mills’ global business.
The announcement follows a slight drop in third-quarter earnings in March to $391.5 million, or 58 cents a share, compared with a year-earlier $392.1 million, or 59 cents. The results met average analyst estimates despite more than a 10% jump in raw material costs.
At the time, General Mills CEO Ken Powell said 2012 served up the “highest level of commodity inflation” in 30 years. He had predicted in the fourth quarter that gross margins would decline as sales momentum slowed.
The company backed its fiscal 2012 earnings target of $2.53 to $2.55 a share, which brackets average analyst estimates of $2.54 in a Thomson Reuters poll.
The guidance excludes the one-time restructuring charges and Yoplait integration costs.