WK Kellogg plans to completely shut down its Omaha, Nebraska plant by the end of 2026 as part of a reorganisation of the business.
The changes will also reduce the cereal maker’s headcount by more than 17% as it streamlines production, the company said on Tuesday.
Shares fell more than 2% in early trading as the Special K maker projected 2024 adjusted net sales to come in at the lower end of its prior forecast range of 1% growth to 1% decline.
Packaged food companies, including Kraft Heinz and General Mills, have flagged falling sales in North America as customers switch to cheaper private label products over branded alternatives.
This change in behaviour is due to higher-for-longer interest rates and sticky inflation impacting consumers.
WK Kellogg – the North America cereal business of packaged food giant Kellogg, which changed to Kellanova in October – also posted in-line net sales of $672 million for the second quarter.
The reorganisation – approved by the board on 31 July – is expected to result in cumulative restructuring pretax charges of between $230 million and $270 million.
Under the plan, the company will consolidate its manufacturing network beginning with a phased reduction in production at the Nebraska plant.
It will also start scaling back production at its Memphis, Tennessee facility in late 2025.
These changes will reduce headcount by about 550, WK Kellogg said, including job additions at plants where production would increase.
It employed around 3,150 workers at the end of last year.
The cereal maker plans to increase production at its Battle Creek, Michigan; Belleville, Ontario; and Lancaster, Pennsylvania plants.
WK Kellogg plans to spend about $450 million to $500 million on its supply chain networks.
Read More: Kellanova Raises 2024 Forecasts On Stable North American Demand
