Heinz Factory Severance Cost Rises to $93 Million

HJ Heinz Co., the ketchup maker taken private by Berkshire Hathaway Inc. (BRK/A) and 3G Capital, projected severance cost from factory closures will climb to $93 million as the company shutters two European plants.

The new figure was disclosed in a first-quarter regulatory filing today and compares with the $63 million sum listed in the annual report for 2013. Heinz said in February that it was planning shutdowns in Seesen, Germany, and Turnhout, Belgium, after last year announcing closures in Florence, South Carolina; Pocatello, Idaho; and Leamington, Ontario.

Berkshire, led by billionaire Warren Buffett, provided financing last year for the $23.3 billion takeover while Jorge Paulo Lemann’s 3G has been running operations. 3G has replaced executives while cutting jobs and reducing office costs. Buffett, who typically leaves management in place, has said he’d welcome more deals with the buyout firm.

“3G does a magnificent job of running businesses,” Buffett said at his company’s annual meeting on May 3 in Omaha, Nebraska. His firm gets a 9 percent annual dividend on $8 billion of preferred stock in the ketchup maker.

The number of jobs lost in the five factory closures will be about 1,650, according to today’s filing. The figure was 1,350 from the three North American closures.

About $48.6 million of the severance costs had been incurred through March 30, Heinz said. Heinz said in February that it was discussing the planned closures in Europe with worker representatives.

“We have reached agreement on the economic rationale and social plans with employee representatives at Seesen and Turnhout and are now planning phased production transfer and site closures,” Michael Mullen, a spokesman for Pittsburgh-based Heinz, said in an e-mail today.

First-quarter profit climbed 9.8 percent to $195.2 million as lower expenses cushioned a decline in sales, Heinz said in today’s filing. Berkshire got about $188 million of that sum, mostly from from its preferred stake.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editors responsible for this story: Dan Kraut at dkraut2@bloomberg.net Dan Reichl

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.