General Mills Inc. announced that it will close its yogurt manufacturing facility in Carson, Calif., as part of a new restructuring program approved earlier last week.
Established in 1979, the Carson facility produces General Mills yogurt products such as Yoplait and Mountain High Yogurt and distributes them to major retail grocery chains, wholesalers, and club stores.
The consumer foods company based in Minnesota, has not said how many employees will be affected by the decision to close the Carson facility but it said it expects to incur about $130 million in expenses, including $25 million in severance costs, as part of the restructuring, which will focus on consolidating production and “optimizing” labor, logistics and manufacturing operations.
The expenses will also include about $105 million in exit and project-related costs, primarily asset write-offs. The company expects the restructuring to be completed by the end of fiscal 2021.
Over the past 12 months, the company’s share value is said to have dropped by 22%.
During an investor conference at the Consumer Analyst Group of New York (CAGNY) that took place on February 19th, General Mills reaffirmed its key financial targets for the fiscal year ending May 26, 2019. Those targets include:
- Organic net sales are expected to be in a range between flat and up 1 percent. Including the impact of the Blue Buffalo acquisition, net sales are expected to increase 9 to 10 percent in constant currency.
- Constant-currency adjusted operating profit is expected to increase 6 to 9 percent.
- Constant-currency adjusted diluted EPS are expected to range between flat and down 3 percent.
- The company expects free cash flow conversion of at least 95 percent of adjusted after-tax earnings.
- Currency translation is expected to reduce reported net sales by 1 to 2 percentage points in fiscal 2019 and is not expected to have a material impact on full-year adjusted operating profit or adjusted diluted EPS.
According to a press release, General Mills is pursuing its Consumer First strategy and executing against its three key global growth priorities to drive consistent topline growth:
1) Competing effectively through strong innovation, effective consumer marketing, and excellent in-store execution.
2) Accelerating growth on its four differential growth platforms including Häagen-Dazs ice cream, snack bars, Old El Paso Mexican food, and its portfolio of natural and organic food brands.
3) Reshaping its portfolio through growth-enhancing acquisitions and divestitures, including the acquisition of Blue Buffalo, the leading brand in the fast-growing wholesome natural pet food category in the U.S.
By combining consistent topline growth, margin expansion, and disciplined cash conversion and cash returns, General Mills expects to generate top-tier total shareholder returns over the long term.