CINCINNATI — Procter & Gamble will cut another 3,000 to 6,000 office jobs worldwide in the next two years, senior executives said Thursday.
An unknown number of cuts could occur here, where the company is headquartered and has only 90 manufacturing jobs.
Details of the additional job cuts came as chief financial officer Jon Moeller updated analysts and reporters after the company posted lackluster financial results for P&G’s third quarter. P&G (PG) has been cutting thousands of jobs since February 2012 when it first announced it would slash 5,700 jobs or 10% of its non-manufacturing jobs.
In the past three years, P&G has cut a total of nearly 11,000 office jobs and another 10,000 manufacturing jobs worldwide.
On Thursday, Moeller said P&G would end up cutting 25% to 30% of office jobs by mid-2017. The company already has cut 19% of those positions.
“We’re increasing our overhead enrollment reduction target, … reflecting additional opportunities we see,” Moeller said.
P&G factories have achieved a net reduction in jobs despite a worldwide factory building boom, he said. The company plans at least another 18 projects for new or expanded plants overseas.
Moeller’s update built on previous job-cutting guidance that predicted 18% to 22% of nonmanufacturing jobs would be cut by the end of this fiscal year and that the company would target additional cuts of 2% to 4% a year going forward.
P&G did not mention future manufacturing job cuts. The update came after P&G reported disappointing revenue results and lowered its sales outlook because of currency exchange rates and the strong dollar.
Foreign exchange shaved 8% off its sales results and divestitures of minor brands cut another 1%.
P&G reported a $2.2 billion quarterly profit, a 17% decrease from the same period a year ago. The consumer products giant’s bottom line took a $300 million after-tax hit from a noncash charge against itsDuracell batteries business that it is in the process of selling.
Last year, P&G netted a $2.6 billion profit on $19.6 billion in sales during the third quarter.
Sales declined 8% to $18.1 billion for P&G’s fiscal third quarter ended March 31. Organic sales, which exclude the effect of foreign exchange, divestitures or acquisitions, rose 1%.
P&G’s 92 cents of core earnings per share were in line with analyst estimates, but its sales fell short.
P&G lowered its sales guidance for the fiscal year ending June 30: Sales will be down 5% to 6% vs. a February forecast that said sales would decline 3% to 4%. The company said organic sales would climb in the low single digits instead of an increase in the low-to-mid single-digit range outlined in January.
Currency rates will have a bigger effect on annual sales than previously outlined, cutting sales 6% to 7%, up from the 5% forecast in January, the company said.
P&G shares declined $1.48 or 1.8% to close at $80.95 Thursday, but in Friday morning trading, it had gained a bit, to a high of $81.53 a share. It closed Friday at roughly the same as the day before, $81 a share.
“Our third-quarter earnings results were largely in line with what we had expected,” Chief Executive A.G. Lafley said in a statement. “We are focused on the significant opportunities in our control — including brand initiatives and product innovation, business and brand portfolio simplification, overhead savings and major supply chain productivity initiatives — to improve results in 2015 and beyond.”
P&G offered no updates to Wall Street speculation that it was close to announcing beauty brand divestitures and a CEO succession plan. On a conference call with Moeller, some analysts appeared to be growing impatient with P&G’s turnaround progress.
“We’ve been hearing a lot of promise that help is around the corner for years, years. … Now the promise is wait till we break up 14% of sales, 6% of operating profit out of our business. Things will be much better,” Bernstein Research analyst Ali Dibadj said. “How much longer would we have to wait for you guys to decide maybe something even bigger has to happen?”
Moeller replied that P&G was in “probably the biggest transformation the company has gone through” and more time was needed.
“It’s hard to see that all come together at this point,” he said. “We’re happy with the progress, and we’ll see.”
P&G is in the midst of selling off or exiting 100 noncore brands in an attempt to restore focus, sales growth and consistent profit.
Lafley has said most brand sales would disclosed by early summer. In February, P&G executives said once the brand-shedding was complete, the company’s $83 billion in sales would be about $11 billion smaller.
So far, the biggest brands to go are Duracell batteries, which will be sold to Warren Buffett’s Berkshire Hathaway this fall, and Iams and other pet brands, which were sold off last year. P&G also has divested several small fragrance labels, overseas laundry brands, a couple of health ventures, and Camay and Zest soaps.
http://www.usatoday.com/story/money/business/2015/04/24/procter-and-gamble-jobs/26295603/