Kellogg has high of 2.5% on profit, but will resign 7% of employees

SAO PAULO-the net profit of the manufacturer of breakfast cereals Kellogg rose 2.5% in the third quarter of 2013, compared with same period in 2012, to $ 326 million. Still, the company reported that it will lay off 7% of its employees.
In July of this year, the company had 31 thousand employees worldwide and 428 in Brazil. The Brazilian subsidiary of Kellogg does not confirm whether layoffs will affect the team working in the country.
Net revenue shrank 0.1 percent in the period, to $ 3,716 billion, while the cost of goods sold rose 0.53 percent. The company has reduced spending on sales and administrative expenses at 0.74%. The operating profit retreated 1.76% in the range.
Kellogg reported still have reduced interest costs and paid less income tax.
The accumulated 2013, until September, Kellogg's net income fell 0.4 percent to $ 989 million. Net revenues rose 6.18 percent in the period, to $ 11.3 billion. But the cost of goods sold increased by larger proportion, of 9.34%. The company's gross margin was compressed, but still the operating profit climbed 1.64%,.
Layoffs
The layoffs announced today are part of the cost-cutting plan and are included in the "Project K", a program that aims to increase the efficiency of the company in four years.
The savings generated by the project will be mostly invested in strategic areas of Kellogg's business with the objective of increasing revenue, gross margin, operating profit and cash flow, the company said in a statement.
The company estimates that the program will result in cumulative pre-tax charges between $ 1.2 billion and $ 1.4 billion.
"The planned economy should reach an annual run rate between $ 425 million and $ 475 million in 2018," according to the statement.
The company's costs totaled $ 17 million in the third quarter, and the projection is to stay between $ 175 million and $ 200 million a year. The savings will be "minimal" in 2013, and this projection has been included in the forecast, the company said.
Kellogg reported also that the cost will be the company's biggest challenge in 2014. Initial estimates are of investment between 4% and 5% of the projected revenue for 2014 and 2015.