US-based confectionery giant Hershey has announced a restructuring plan that includes reducing its workforce to drive productivity through process automation.
The owner of the Reese’s brand has not disclosed the exact number of job losses. However, they stated in a release that the layoffs will affect “less than 5% of its workforce.”
As per the food giant’s statement, the decision aims to reduce expenses associated with the supply chain and manufacturing, optimize costs, and utilize new technology and business strategies to automate processes, ultimately yielding long-term savings.
Hershey stated that it anticipates minimal disruption to its employee base from the move.
“We are focused on leveraging investments we are making in technology to drive automation and the scale across multiple categories – confection, salty snacks”, the chocolate producer said.
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“Examples of this would be driving greater efficiencies and connectivity through shared services, enabling better forecasting and responding to changes in the marketplace more quickly to better meet consumer needs.”
The two-year plan, ending in 2026, is expected to generate $300 million in “ongoing annual savings.
Hershey stated that the redundancies will lead to severance expenses ranging between $45 million and $60 million.
Last August, Hershey announced plans to shut down a US facility that produces Dot’s Homestyle Pretzels.
The US confectionery major announced that its Velva factory in North Dakota will no longer be operational as the company strives to enhance efficiency for its pretzel brand.
In Q4 of 2023, Hershey experienced a 0.2% year-on-year increase in net sales to $2.65 billion. However, its net income of $349 million decreased by 11.5%.
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Michele Buck, Hershey’s CEO, said, “We continue to operate in a dynamic environment but we are encouraged by the resilience of seasonal traditions and the consumer response to innovation within our categories.
“While historic cocoa prices are expected to limit earnings growth this year, we believe our strong marketing plans, innovation and brand investments will drive top-line growth and meet consumers’ evolving needs. We are elevating our focus on productivity and transformation to strengthen our business and deliver peer leading performance over the long term.”
Hershey stated that it anticipates a 2% to 3% growth in net sales for 2024.
