Milling & Baking News Corporate Profiles - 2017 - 122

Company Overview

TreeHouse Foods, Inc.
Company to close plants, reduce s.k.u.s

T

reeHouse 2020 is under way at private label manufacturer TreeHouse Foods, Inc.,
Oak Brook, Ill. The restructuring program
will feature plant closings, line retirements,
network optimization and productivity investments to eliminate redundancy and lead to the
rationalization of corresponding unprofitable
stock-keeping units (s.k.u.s.) and non-strategic
customers.
Once TreeHouse 2020 is completed, the company expects to generate 300 basis points of
annual operating margin improvement by the
end of the year 2020.
The executive charged with executing TreeHouse 2020 is Robert B. Aiken Jr., president
and chief operating officer. Mr. Aiken stepped
into the role in July, replacing interim company
president Dennis F. Riordan, who will remain
with TreeHouse Foods as a senior adviser.
Prior to the unveiling of TreeHouse 2020, the
company sold products into 32 different food and
beverage categories, employed 16,000 and operated more than 50 processing plants. As part
of the program, the company plans to reduce its
number of unique customers to 1,100 from 1,400.
Management also has set a goal of rationalizing
25% of the company's estimated 23,000 s.k.u.s.
Mr. Aiken said the s.k.u. reductions will allow
TreeHouse executives to make targeted decisions

Chief executive officer -
Sam K. Reed

122 \ October 2017

regarding plant and production line optimization.
In August, the company said it would close
two manufacturing plants by the end of the year
and announced a shift of some production away
from another plant.
"We'll also be permanently shutting down numerous lines that are projected to operate at
low utilization levels," Mr. Aiken said during an
earnings call in August.
Over the course of the program, the company
expects to increase capacity utilization by up to
20% from existing levels, while still maintaining the flexibility to grow, Mr. Aiken said.
In April, TreeHouse Foods announced the
sale of its soup and infant feeding business to a
private equity firm. This followed a reorganization of the company into five divisions covering
baked goods, condiments, meals, snacks and
beverages.
Looking ahead, management sees continuing headwinds from a highly competitive environment that has pressured volumes across
nearly all of the company's divisions, said Sam
K. Reed, chairman and chief executive officer.
"It is clear that we are witnessing an evolution in the retail landscape, as digital technology
and bricks and mortar compete for the attention
of consumers in a slow- to no-growth food and
beverage marketplace," Mr. Reed said in August.
"As our customers seek growth in this environment by reinvesting in their corporate brands,
we continue to believe that we are best positioned to capitalize on the opportunity. However,
it is imperative that we as an organization return
to our legacy levels of profitability."
During an interview at the company's headquarters in March, Mr. Reed said his role with
the company in the early "run and gun" days was
to seek new investment opportunities that would
allow TreeHouse Foods to add capabilities and
scale. Today, his focus is more on strategy.
"I've moved from taking money, buying plants
and building systems to developing people, I.T.
systems and infrastructure," he said. "And really importantly, create a unified strategy. This
marketplace is evolving, and you have to reinvent yourself to stay ahead." CP

TreeHouse Foods, Inc.
net income (loss)
in millions

2016

-$228.6

2015

$114.9

2014

$89.9

TreeHouse Foods, Inc.
net sales
in millions

$6,175.1

2016

2015

$3,206.4

2014 $2,946.1

TreeHouse Foods, Inc.
share price

per share
$96

$84

$72

$60
Sept. Dec. Mar. June Sept.
2016
2017

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