P&G expands job cuts as part of new $10M cost-savings program
CINCINNATI — Procter & Gamble unveiled a larger than expected cost-savings program that involves cutting a total of 5,700 nonmanufacturing jobs in an effort to trim costs by the end of fiscal 2016, said P&G CEO Bob McDonald during the company’s annual Consumer Analyst Group of New York conference in Boca Raton, Fla.
According to published reports, the cuts represent about 10% of P&G’s nonmanufacturing jobs. P&G has about 57,000 nonmanufacturing employees among its total workforce of about 129,000.
The move is part of a new plan to cut costs by $10 billion through fiscal 2016. It includes $1 billion in marketing costs and $3 billion in overhead costs.
“To put the plan in perspective, it represents a huge 60% of fiscal 2012 operating profit. We doubt P&G can achieve this full target given such a large increase since its analyst day and low headcount savings contribution (~10%); but even if P&G slight misses its goals, the plan would provide much greater EPS flex,” Morgan Stanley analyst Dara Mohensian stated in a research note.
As reported by Drug Store News, P&G stated in its second-quarter earnings call in January that it would cut about 1,600 positions by the end of the fiscal year.
According to published reports, P&G said on Thursday it would cut another 4,100 jobs during fiscal 2013, which begins in July.
In addition, P&G reiterated underlying fiscal 2012 EPS guidance but officially lowered EPS from Pringles dilution, with fiscal 2012 EPS moving down by 7 cents to between $3.93 and $4.03, and the third quarter by 2 cents to between 89 cents and 95 cents.
Procter & Gamble is selling its Pringles potato chip business to Kellogg after a deal with Diamond Foods fell through.