Abbott cutting 700 from workforce

(Crain's) — Abbott Laboratories announced today that it is cutting jobs, including in Illinois, as part of a restructuring effort.

The medical device and drugmaker said it will eliminate 700 jobs in the United States and Puerto Rico, according to the Chicago Tribune. "Fewer than 200" of those cuts will come from the Chicago area.
Abbott's workforce in the six-county Chicago area totals an estimated 13,000, according to Crain's list of the largest local employers. Its worldwide workforce is an estimated 90,000.

The job cuts announcement came after Abbott reported a 12 percent increase in fourth-quarter profit Wednesday, as the blockbuster anti-inflammatory drug Humira continued to dominate the company's performance with double-digit sales growth.

Company shares were down $1.19, or 2.1 percent, at $54.79 in midday trading.
In October, Abbott surprised investors and analysts with the announcement that it would spin off its branded drug business, including Humira. Company executives said the split would allow investors to separately value Abbott's businesses, which also include baby formula, generic drugs and medical implants.
Wednesday's results highlighted the rationale for the split, with top-selling drug Humira dominating the company's results, contributing $2.18 billion, or over 20 percent, of sales.

While Humira has been the key to Abbott's growth, it has also a weighed on the company's stock, overshadowing performance of its other businesses. The drug, which is used to treat psoriasis and rheumatoid arthritis, loses patent protection in 2016, and no obvious successor has appeared in the company's pipeline. The split-up frees Abbott from the risks and obligations of developing innovative pharmaceutical drugs, leaving the company with a more predictable business built around nutritional formula, generic drugs and heart stents.
Abbott earned $1.62 billion, or $1.02 per share, up from $1.44 billion, or 92 cents per share, in the prior-year period. Excluding one-time items the company earned $1.45 per share, up from $1.30 in the same period a year earlier. Total company sales grew 4.1 percent to $10.38 billion.
Analysts polled by FactSet expect fourth-quarter earnings per share of $1.44 on revenue of $10.59 billion.
For 2012, the North Chicago company expects to earn $4.95 to $5.05 per share, compared with the average analyst estimate of $5.02 per share.

The company's branded drug business posted sales of $4.78 billion for the period, an increase of 6.7 percent. The business, which includes the cholesterol drugs Trilipix and Niaspan among other treatments, is scheduled to become a separate business before the end of 2012. The new company will have revenue of roughly $18 billion.

Among Abbott's remaining businesses, generic drugs slipped 4.6 percent to $1.39 billion. Nutritionals rose 8.6 percent to $1.56 billion while sales of the company's stents and other heart devices were roughly flat at $826 million.

Kraft to cut 1,600 jobs in U.S., Canada

(Crain's) — Kraft Foods Inc. said it will cut 1,600 positions in the U.S. and Canada as it prepares to split into two companies. The processed food maker employs 46,500 people worldwide, which means the layoffs will reduce headcount by 3.5%.

Kraft also said it expects its fourth-quarter earnings to total $1.95 a share, with operating earnings at $2.28 a share, a penny more than it had forecast. The company said "organic revenue" rose 6.5% in the period, thanks to mid-single digits increases in North America and Europe and double digits in developing markets. The company had predicted organic sales growth at 6%. Kraft plans to formally report fourth-quarter results on Feb. 21.

The Northfield-based company will reorganize its domestic sales team, consolidate its U.S. management centers and trim the corporate and business units. About 40% of the cuts will be in sales, and about 20% will come from eliminating positions that already are vacant.

"When we announced our decision to create two world-class companies last August, we said both would be leaner, more competitive organizations," Kraft Chairman and CEO Irene Rosenfeld said in a statement. "For the past year, the North American team has been working to streamline operations to deliver sustainable top-tier performance and continue to invest in our iconic brands.”

Kraft will cut its U.S. management offices from four locations to two once the North American grocery company is spun off later this year.

Kraft's Glenview management center will close by the end of 2013 and Kraft's 440-employee beverage business in Tarrytown, N.Y., and its Planters unit in East Hanover, N.J., will move to the Chicago area by December 2012. Employees of the two East Coast units will have the option to transfer to the future company headquarters.

Kraft has two facilities in Glenview, the management center and a research and development complex; together they employ 1,378 people.

The headquarters of the global snack company will be based in the Chicago area at a site under consideration, the company said in the statement. The North American regional headquarters for the global snack company will be in the East Hanover campus.

"Having the majority of our business units together in one location will provide greater development opportunities for our people and will help us continue building our brands more efficiently and collaboratively," Tony Vernon, president of Kraft Foods North America and CEO of the future grocery company, said in a statement.

(Ms. Rosenfeld will become CEO of Kraft's international snack business.)

The company's Madison, Wis., management center which has 1,542 employees will continue as the site for its Oscar Mayer unit. Kraft also will retain operations in the Toronto area where it employs 2,864 employees.

“We finished 2011 with strong business momentum in each of our geographies," Ms. Rosenfeld said in announcing financial results. "Our virtuous cycle of investment continues to pay off around the world, despite a difficult operating environment. We expect our 2011 results will place us solidly among the top-tier of our peer group, and we remain on track to launch two industry-leading companies in 2012."

Kraft’s snack business will continue to use a direct store delivery model. The North American grocery company will contract local sales to Acosta Sales & Marketing for grocery and mass retail channels. Crossmark will continue to serve the grocery company in convenience stores.

Most of the U.S. retail sales employees will move to the North American region of the global snack company. The company expects to have both sales organizations complete by April 1.