Kraft To Cut 2,500 Jobs - Update

(RTTNews) - Food giant Kraft Heinz Co (KHC) is cutting about 2,500 jobs to reduce costs as it struggles to boost sales in times of increased competition and consumers seeking fresher foods with minimal ingredients.

This is the first round of job cuts after last month's merger of packaged foods maker Kraft Foods and ketchup maker H.J. Heinz. The deal was engineered by Heinz owners 3G Capital Partners and Berkshire Hathaway Inc.'s Warren Buffett.

As the integration efforts take shape, Kraft Heinz is seeking to become a nimbler and more efficient company, seeking to cut $1.5 billion in costs by 2017.

The job cuts account for 5 percent of Kraft Heinz's global workforce. The cuts include 700 employees at its Chicago-area headquarters in Northfield, Illinois. The company has dual headquarters, the other location being Pittsburgh.

Some restructuring at Kraft Heinz was expected as legacy Heinz executives and 3G, a Brazilian investment firm, have sought to simplify operations at the newly merged company. Under 3G, Heinz already had cut jobs in 2013, thus showing its focus on cost savings.

On Monday, both Kraft and Heinz divisions reported a decline in second-quarter sales, hurt by factors ranging from lower beverage sales and pricing pressures to a stronger dollar and weak European demand.

For Kraft, which has been facing sales pressures, the Heinz merger is expected to act as a bulwark, with the combined company expected to generate annual sales of about $28 billion, driven by an array of billion dollar brands. The merger created the third-largest food and beverage company in North America and the fifth largest internationally.

KHC is trading at $76.26, down $1.71 or 2.19%, on a volume of 1.4 million shares on the Nasdaq.