Coca-Cola to Fire 4,000 in North America, Promises More Cuts Globally
Coca-Cola Co. (NYSE: KO) on Friday announced that it is streamlining its operations and will offer a voluntary layoff program to about 4,000 employees in the United States, Canada and Puerto Rico. Coke also said that a similar program “will be offered in many countries internationally” and that the voluntary programs are expected to reduce the number of involuntary layoffs.
Between 2016 and 2017, Coca-Cola cut its global workforce by nearly 40% to around 62,000. As of December 31, 2019, that number had risen to 86,200. In its annual report for last year, Coca-Cola said it had about 10,100 employees in the United States. Estimate another 3,000 or so in Canada and Puerto Rico, and the loss of 4,000 North American jobs is a major trimming.
The company said it expects the global severance programs to cost between $350 and $550 million.
Neither Coca-Cola nor its chief rival, PepsiCo Inc. (NASDAQ: PEP) has fared all that well since the COVID-19 pandemic sent shares tumbling in March. While Coke wins a recent investor taste test, the company does need to modernize.
To that end, Coca-Cola also announced a global reorganization plan Friday. It is reducing the number of global operating units from 17 to nine, including new operating units focused on regional and local demands. A new platform services organization is being created to provide “global services and enhanced expertise across a range of critical capabilities.”
CEO James Quincey commented that the changes to Coke’s operating model “will shift our marketing to drive more growth and put execution closer to customers and consumers while prioritizing a portfolio of strong brands and a disciplined innovation framework.” He also noted that these organizational changes “will include significant changes in the structure of our workforce.”
Coca-Cola shares traded up fractionally early Friday, at $48.60 in a 52-week range of $36.27 to $60.13. The consensus 12-month price target is $53.55, and Coke pays a dividend yield of 3.41%.
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