updated 1/26/2004 9:39:17 AM ET 2004-01-26T14:39:17

Kraft Foods is expected on Tuesday to unveil a sweeping restructuring and cost-cutting program including the loss of up to 6,500 jobs, analysts say. 

The biggest North American food maker - and world number two - is also widely expected to lower its growth targets to more achievable levels, after several disappointing quarters. 

The moves follow last month's appointment of Roger Deromedi as sole chief executive of Kraft. He was previously shared the job with Betsy Holden, who has been shifted to head a new global marketing and product development unit. 

The marketing unit was created as part of a reorganisation unveiled by Mr Deromedi earlier this month, aimed at transforming Kraft from a company divided into a bigger North American arm and smaller international arm into a more integrated, global business. 

The market believes the changes may be aimed not just at improving sluggish performance at Kraft, owner of Oreo cookies and Philadelphia cheese, but at preparing it for a full spin-off - possibly next year - from Altria, its parent. Altria, then called Philip Morris, spun off 16 per cent of Kraft in 2001. 

Analysts are drawing parallels with the restructuring plans of AG Lafley at Procter & Gamble and Jim Kilts at Gillette - whom Mr Deromedi knows well as he sits on the Gillette board. The "matrix" organisational plan, with five global product sectors and two regional units, is similar to that adopted by P&G and Gillette. 

Mr Deromedi will hold his first solo meeting with analysts tomorrow. Analysts forecast that he will announce thousands of job cuts and a series of plant closures. Eric Katzman of Deutsche Bank said in a research note he expected up to 6,500 job cuts, 10 per cent of the North American workforce. 

Kraft refused to comment on the restructuring. Mr Deromedi is also expected to follow Mr Lafley's example at P&G and lower what the market has come to see as Kraft's unrealistic growth targets. Analysts speculated that sales growth guidance would be lowered from 3 per cent to 1-2 per cent a year, and earnings growth from 8-10 per cent to 7-9 per cent. 

"Perhaps perversely, the lower the bar and lower the growth rate Kraft talks about, the better, since the targets would be perceived as more sustainable," said David Nelson of Credit Suisse First Boston.


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