P&G to cut 5,700 jobs in restructuring

MAE ANDERSON

Published: Thursday, Feb. 23 2012 12:45 p.m. MST

FILE - This Oct. 11, 2011 file photo, shows Procter & Gamble chief executive Robert A. McDonald speaking at the companies annual shareholders meeting, in Cincinnati. Consumer products maker Procter & Gamble Inc. plans to cut 5,700 jobs globally by the end of the fiscal year ending in June 2013 as part of a cost-cutting plan.

Al Behrman, File, Associated Press

Enlarge photo»

NEW YORK — Consumer products maker Procter & Gamble Inc. said Thursday it plans to cut 5,700 jobs over the next year and a half as part of a cost-cutting plan.

Procter & Gamble says it plans to save $10 billion by the end of the fiscal year ending in June 2016.

The world's largest consumer products maker, which makes items ranging Luvs diapers, Bounty paper towels and Charmin toilet paper, has been experienced slowing sales volume in the U.S. as consumers continue to spend cautiously. The company also has faced high costs for fuel, packaging and other commodities.

In addition, like other U.S. companies that do business in foreign markets, P&G isn't getting the same benefits from foreign currency exchanges that it enjoyed last year. When the dollar is weak, as it was for most of last year, revenue raised overseas translates into more dollars when converted at headquarters.

The cost-cutting plan is an attempt to address these problems even as the Cincinnati company keeps up spending on initiatives it sees as key for its future growth. These include marketing new products like the single-unit does Tide Pods in North America and expanding Oral B in Latin America.

The job cuts amount to about 10 percent of the company's non-manufacturing workforce, and are expected to be complete by the end of the fiscal year that ends June 2013. The cuts include 1,600 jobs that P&G announced earlier this month. P&G said that even though overall headcount will be reduced, hiring will continue in growth areas such as China or emerging markets.

Procter & Gamble CEO Robert McDonald announced the moves at the Consumer Analyst Group of New York conference in Boca Raton, Fla. The presentation was webcast.

Other parts of the cost-cutting plan include streamlining its operations and cutting costs related to packaging and materials. The moves will cost $3.5 billion in restructuring over a four-year period.

The company now expects adjusted net income in fiscal 2012 of $3.93 to $4.03 per share, from prior guidance of $4 to $4.10 per share. Analysts expect $4.06 per share, according to FactSet. The guidance reflects P&G's agreement to sell its Pringles business to Kellogg for $2.7 billion.

Shares rose $1.56, or 2.4 percent, to $66.

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