General Mills is eliminating the position of international chief operating officer and will cut up to 600 jobs as a result of a global restructuring.
The move consolidates more responsibility under Jeff Harmening, whom many believe will be the next chief executive, while reducing costs to meet the General Mills' profit targets.
The food company said Monday it will not fill the top international position after Christopher O'Leary leaves the company at the end of the year. Instead, General Mills will divvy up the job among four group presidents. Jon Nudi will lead North American retail, Bethany Quam will lead Europe and Australia, Christina Law will be responsible for Asia and Latin America while Shawn O'Grady will lead convenience stores and food service.
All four will report to Harmening, the company's president and chief operating officer, who will take on international operations upon O'Leary's departure.
Jobs will be lost in the U.S., possibly including the company's headquarters in Golden Valley, and abroad — though the company declined to provide more details. About half of General Mills' approximately 40,000 employees work outside the U.S. and about 3,000 people work at the company's Twin Cities corporate campus.
It is the latest in a series of sweeping cost-saving initiatives taken by the maker of Betty Crocker cake mixes and Nature Valley granola bars. Since 2014, the company has eliminated or announced plans to cut about 5,000 jobs.
The company has told investors it intends to achieve growth through improved sales as well as trimming costs. But with stubbornly slow sales growth, solutions depend increasingly on cost-cutting initiatives given titles like "Project Catalyst" and "Project Century."
"We continue to prioritize both growth and returns," said Harmening in a statement. "The structural changes announced [Monday] will help us unlock global growth opportunities and go after them by efficiently restructuring our teams and processes. In addition, the capability investments and savings generated by these changes will help us deliver our fiscal 2018 adjusted operating profit margin target of 20 percent."
General Mills is not alone in these cost-cutting endeavors. The high-profile merger between Kraft and Heinz in 2015 led to a universal belt-tightening in the U.S. packaged-foods industry. The marriage of Kraft and Heinz was orchestrated by Warren Buffett's Berkshire Hathaway and private equity firm 3G, which is known for extracting profits from companies through mass layoffs, austere budgets and a change in corporate culture.
Because 3G has been public about its intent to consolidate the food industry further, "firms throughout the packaged food space have been taking a more stringent look at their cost structures and working to extract efficiencies," said Erin Lash, a food industry analyst at Morningstar.
With packaged food sales struggling to regain growth momentum in the face of changing consumer habits, companies that fail to operate efficiently — including job and budget cuts — could become Kraft-Heinz takeover targets, Lash said.
"The competitive pressures that we are seeing and the challenges to reignite top-line growth, that combination has led firms to take a more stringent look at their cost structures," she said.
The consolidation of power beneath Harmening is a normal step when grooming a new chief executive, experts said.
"Part of this is the next step in terms of the succession plan," said Leigh Bailey, founder and CEO of the Bailey Group, which advises executive team on leadership transitions. "Clearly, they've decided on their top choice for an internal successor and are adding responsibilities in order to further prepare [Harmening] to take over the top spot."
This new role will require Harmening to build a team and delegate responsibilities, much like a chief executive does, Bailey said.
General Mills also announced plans to improve its growth outlook by investing in e-commerce, new marketing approaches and strategic revenue management. It is forming a new group to develop global revenue that will report to O'Grady.
General Mills also is hiring a new global chief marketing officer who will report to Harmening.
One-time costs are expected to cost the company between $60 million and $90 million with the restructuring being completed in 2018, according to a public filing.
The company's stock was little changed Monday, closing at $61.13, up 19 cents for the day.