General Mills will redesign the plant and warehouse network behind Cheerios, Blue Buffalo and Pillsbury, as part of a plan to cut $3 billion in costs by fiscal 2030. The company has approved the first funded step: a $101 million restructuring charge. The work is expected to be complete by 2029.
The diagnosis: COO Dana McNabb told the earnings call the network “was built for a different time, a little bit lower volume.” She said it now needs “faster innovation, more packaging flexibility.” The company wants a network that can move more products through more channels, including e-commerce.
What's funded: A restructuring charge is money set aside for one-time costs like plant changes, write-offs and severance. Of the $101 million, about $66 million is asset write-offs and $35 million is severance and other costs. About $33 million is cash.
The $3 billion target includes about $2 billion from its long-running Holistic Margin Management productivity program, worth about 4% of cost of goods a year, and $1 billion from a transformation program that includes the network redesign. CEO Jeff Harmening expects $750 million of it in fiscal 2027.
The catch: The redesign is still in its early stages.
McNabb said the company is “in the early phases of this design.” It has not identified any plants or vendors, and the restructuring will continue through 2029. The charge came in a Q4 that also included a $2.1 billion operating loss from write-downs and the sale of its Brazil business. Adjusted earnings were $0.95 a share, above estimates.
Other CPG makers are doing the same:
P&G is running a $1.5 billion ‘Supply Chain 3.0’ program
Mondelez is spending about $1.2 billion
Kimberly-Clark is investing about $2 billion in North America
General Mills’ $3 billion is the largest of the group.
