In a strategic move aimed at enhancing productivity and efficiency, Kellanova, a global food company, has announced the closure of two of its manufacturing plants—one in the United States and another in the United Kingdom.
In the United States, Kellanova will be closing its Eggo frozen food facility located in Rossville, Tennessee, by the end of 2024. The production from this plant will be transferred to other facilities within Kellanova’s Americas frozen network, which currently comprises 14 manufacturing facilities in North America. This decision comes as part of a broader reorganization of the North America frozen supply chain network, with the goal of driving increased productivity, as stated in a filing with the Securities and Exchange Commission on February 8.
The closure of the Eggo facility is expected to result in cumulative pretax charges of approximately $75 million. The company estimates cash costs of about $20 million, covering employee-related costs and charges related to capital expenses, while non-cash costs are expected to be approximately $55 million, primarily consisting of asset impairment, accelerated depreciation, and asset write-offs.
Kellanova anticipates that the cost savings from this reorganization will start contributing to gross margin improvements in the second half of 2024, with full run rate expected to be reached by 2025.
In addition to the closure in the United States, Kellanova also revealed plans to shut down its European cereal plant located in Trafford Park, Manchester, UK, by the end of 2026. This facility, which currently employs 360 people, is part of a proposed reorganization of the company’s European cereal supply chain network.
The closure of the European plant is expected to result in cumulative pretax charges of approximately $120 million. Cash costs are projected to be around $80 million over three years, with non-cash costs estimated at about $40 million.
These strategic decisions underline Kellanova’s commitment to enhancing operational efficiency and aligning its manufacturing footprint with evolving market demands.
(Source: Food Business News | Global Food Industry)
