ConAgra to Eliminate 6,500 Jobs in Restructuring
NEW YORK (AP) _ ConAgra Inc. announced Tuesday that it will eliminate about 6,500 jobs and close or reconfigure 29 plants in a restructuring designed to make the huge food company more efficient.
Omaha, Neb.-based ConAgra said the restructuring will bring pretax charges of $505 million in the fiscal quarter ending May 26. That will reduce its fiscal fourth-quarter profit by about $360 million.
``For our shareholders and employees this is the right step to make ConAgra more competitive, more secure, more profitable,″ chairman and chief executive officer Philip B. Fletcher said in a statement. ``But the decision was difficult because many jobs will be eliminated.″
In addition to producing food for consumers under such brand names as Healthy Choice, La Choy, Armour and Swiss Miss, ConAgra supplies feed and fertilizer to farmers and produces commodities like grain and beef. It has sales of more than $24 billion a year.
The job cuts will reduce its current work force of more than 90,000 by about 7 percent.
Analysts said the move was part of an effort by ConAgra to lower its cost structure in order to grow more competitive and improve profit margins.
``It’s a company of very strong businesses across the food chain. They are a strong performer with good, stable operating cash flows,″ said Doris Nakamura, an analyst with Duff & Phelps in Chicago. ``I would say they are taking steps to be more efficient and profitable.″
ConAgra said it would not identify the production plants to be closed until it can notify employees. Most will be notified in the next few days, with all informed by May 24.
Workers at the company’s headquarters in Omaha heard of the restructuring late Tuesday through company e-mail.
``I was shocked. We all were shocked,″ said Sandy Ledger, who has worked for three years in ConAgra’s finance department of its frozen foods division.
The overall restructuring is expected to produce pretax savings of about $50 million in fiscal 1997, $100 million the next year and $125 million the year after that. ConAgra said it expects the savings to boost profits as well as provide funds to be reinvested in the company.
The company announced the restructuring after the close of financial market trading. Its shares had closed unchanged Tuesday at $39 each on the New York Stock Exchange.
In its fiscal third quarter, ConAgra’s earnings rose 8 percent to $128.4 million, or 55 cents a share, on sales of $5.77 billion.