Kraft split might cost up to 2 billion euro

Kraft split might cost up to 2 billion euro

Kraft's planned split in two divisions may cost up to 2 billion euro, said the company in its press release of the 2011 financial results. Meanwhile, Belgian workers agreed to a compromise to save 20 jobs - at the cost of 79 others.

Expensive, but necessary, operation

Last August, Kraft announced it would separate the global snack activities from the group into an entity that would receive its definitive name in March. The new company would hold brands like LU, Côte d'Or, Trident and Cadbury; the small part of Kraft Foods that remains will carry the likes of Philadelphia and Capri Sun.

 

The whole operation could cost up to 2 billion euro: Kraft estimates that the reorganisation itself might cost 1.2 to 1.4 billion, while refinancing might lead to an extra cost of 300 to 600 million. In addition – or compensation – to that, 1,600 jobs will be cut in the US. The reorganisation is meant to make sure both separate companies will be able to reach their full potential.

 

Q4 saw profit go up 53.7%

Kraft's fourth quarter was a strong one, elevating its turnover to 14.7 billion dollar (11 billion euro; + 6.6%). The group's net profit rose to 830 million dollar (630 million euro; +53.7%) because of a series of cost-cutting measures.

 

For the whole year, Kraft's total turnover was 54.4 billion dollar (41 billion euro; +10.5%).  “We delivered terrific results in 2011, and our businesses are healthier than ever due to the disciplined execution of our strategy,” said CEO Irene Rosenfeld, Chairman. “We expect to deliver top-tier growth in 2012, in line with our long-term targets.” 

 

Chokotoff production stays in Belgium

In the Belgian factory at Halle, workers have agreed to the compromise of keeping the production of Chokotoff and watching two other production lines (Bouchées and Mignonettes) leave to Eastern Europe.

 

Kraft's original plan was to remove the three products from Halle (near Brussels), at a cost of 99 jobs. The compromise saves 20 jobs from being cut, and guarantees the 420 people in the factory they can continue to work until at least 2015.

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