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Maduro seizes Kellogg plant after it leaves Venezuela due to crisis

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05/16/2018 | 12:49am CEST
Boxes of corn flakes made by Kellogg are seen on a shelf inside al local shop in Caracas

CARACAS (Reuters) - U.S.-based cereal maker Kellogg Co on Tuesday pulled out of Venezuela due to the country's deep economic crisis, and an angry President Nicolas Maduro said its units would be taken over and given to workers.

Kellogg confirmed later on Tuesday that its manufacturing plant had been seized by the leftist government, the latest company to jump ship amid Venezuela's tough business climate.

"I've decided to hand the company over to the workers so that they can continue producing for the people," Maduro said at a campaign rally ahead of Sunday's presidential election.

"We've begun judicial proceedings against the business leaders of Kellogg's because their exit is unconstitutional," Maduro added to cheers from red-shirted supporters.

Maduro blames Venezuela's crisis on an "economic war" he says is waged by Washington, greedy businessmen and coup-mongers.

Kellogg announced its retreat earlier on Tuesday, making it the latest multinational to exit the oil-rich country, which is heaving under hyperinflation and strict price controls.

"The current economic and social deterioration in the country has now prompted the company to discontinue operations," Kellogg said in a statement, noting that it had already written off the value of its Venezuela holdings.

The company's local operations had around 400 workers, according to local media.

Kellogg did not specify the difficulties it was facing in Venezuela, but companies have typically been struggling to find raw materials due to product shortages and currency controls that crimp imports. Maduro's government also stops companies from raising prices to keep up with hyperinflation, sometimes forcing companies to sell below the cost of production.

Other multinational companies that have given up on the OPEC country, abandoning assets or selling them cheap, include Clorox, Kimberly-Clark, General Mills, General Motors and Harvest Natural Resources.

Socialist Maduro has taken over the factories of some companies that have left the country. In 2014, authorities took over two plants belonging to U.S. cleaning products maker Clorox Co after its departure.

"This reminds me of the Clorox case," opposition lawmaker Jose Guerra tweeted about Kellogg. "Operations halted due to lack of raw materials, the government took it over, and now it's paralysed.... So that means Corn Flakes are over."

Kellogg warned against sales of its products or brands in Venezuela.

"Kellogg is not responsible for the unauthorised use of the commercial names and brands that are the property of the company and will exercise legal actions available as necessary," the company said, adding it would like to return to Venezuela in the future.

(Writing by Alexandra Ulmer and Girish Gupta; Editing by Leslie Adler and Phil Berlowitz)

By Corina Pons and Alexandra Ulmer

Stocks mentioned in the article
ChangeLast1st jan.
CLOROX -0.10% 119.44 Delayed Quote.-19.70%
GENERAL MILLS 0.86% 42.29 Delayed Quote.-28.67%
GENERAL MOTORS CORPORATION -1.12% 37.85 Delayed Quote.-7.07%
KIMBERLY-CLARK -0.22% 104.55 Delayed Quote.-13.21%
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Financials ($)
Sales 2018 13 440 M
EBIT 2018 2 012 M
Net income 2018 1 504 M
Debt 2018 8 034 M
Yield 2018 3,55%
P/E ratio 2018 14,64
P/E ratio 2019 13,87
EV / Sales 2018 2,20x
EV / Sales 2019 2,14x
Capitalization 21 584 M
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Mean consensus HOLD
Number of Analysts 20
Average target price 69,5 $
Spread / Average Target 12%
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Managers
NameTitle
Steven A. Cahillane Chairman & Chief Executive Officer
Fareed A. Khan Chief Financial Officer & Senior Vice President
Brian S. Rice Chief Information Officer & Senior Vice President
James M. M. Jenness Director
Donald R. Knauss Lead Independent Director
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