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Kellogg (K) says it is exploring the sale of its cakes and fruit snacks; The organizational structure will be transformed





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Kellogg Company (NYSE: K) announced today two significant changes in its North American business designed to ensure it has the right operating model and portfolio to deliver profitable growth in the future.

Only, beginning in January 2019, Kellogg's North American (KNA) organizational structure will be redesigned to better enable the company to win on the market and deliver top-line growth. Secondly, Kellogg explores the sale of its cakes and fruit snack businesses to enable the company to bring a sharper focus on its core business.

"The Kellogg Company's Deploy for Growth Strategy, announced earlier this year, requires the company to sharpen our focus and adjust our resources around our greatest opportunities to grow our top line and return to long-term sustainable growth," said Steve. Cahillane, Chairman and Chief Executive Officer, Kellogg Company. "Finally, we believe that these changes will make Kellogg more flexible and better focused on increasing demand for our food."

Structural changes reduce complexity, increase responsiveness In order to Increase agility, Kellogg makes four primary changes to KNA's organizational structure:

  1. Consolidates US business units for food, snacks and frozen foods into a single categorization-focused organization that consists of 80 percent of KNA revenue,
  2. Combining sales functions within breakfast fridges, snacks and frozen and retail. A single Kellogg American said organization to improve customer focus
  3. To build a consolidated, end-to-end KNA Supply Chain, including procurement, production, logistics and customer service to increase the scale, improve capacity and ensure delivery of the company's growth target; and
  4. Invest in new e-commerce and integrated business planning.

"Successful implementation of the KNA growth distribution strategy requires us to expand our business through strong commercial ideas and innovation, prioritized investment choices, excellence in implementation and increased Speed-to-Market," said Chris Hood, president, Kellogg North America. . "We are convinced that the changes we put into place will help us achieve these goals."

Form a Growth Portfolio Investing in business areas with the highest growth potential is central to establishing a growth portfolio, a key component of Kellogg's Deploy for Growth Strategy.

After a thorough assessment, Kellogg investigates the sale of its cookie business (including Keebler Famous A mosa, ] Mother's and ] Murray brands) and fruit snacks business (including Stretch Island brand.]

"We must make strategic choices about our vir sensitivity and these brands have had difficulty competing for resources and investments in our portfolio, "La Cahillane said. "Nevertheless, we wholeheartedly believe that these iconic and dear brands can thrive in the portfolio of another organization that can focus on growth in these categories."

The reorganization of Kellogg North America is one of the final planned measures under the company's Project K restructuring program. As a result, acquisition costs and ongoing savings are included in the previously communicated financial estimates for the five-year project program. The financial consequences of the potential sales of businesses will be addressed upon the announcement of a transaction.

More details will be given during the analyst and investor event "Day @ K" Tuesday, November 13th. A webcast of the event is available at https://investor.kelloggs.com .



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