UPDATE 2-Newell to restructure to offset resin costs

(Adds CEO comment)

By Karen Jacobs

ATLANTA, July 15 (Reuters) - Consumer products maker Newell Rubbermaid Inc (NWL.N) said on Tuesday it would exit some product lines and raise prices to offset rapidly rising plastics costs and protect its profit margins.

The maker of Sharpie markers, Goody hair products and Rubbermaid storage containers also cut its full-year profit outlook to cover the possibility of oil prices reaching the $200 a barrel level.

Newell expects to sell off, cut back or close down about $500 million in sales of selected consumer product categories. The company had total sales of $6.4 billion in 2007.

It said the action would be focused on the most resin-intensive product areas, with its Rubbermaid home products being one of the most affected segments.

"In categories where resin is a high percentage of cost of goods sold and the consumer's willingness to pay for innovation is low, the economics are no longer viable," Newell Rubbermaid Chief Executive Mark Ketchum said in a statement.

In a later interview, Ketchum said that while Rubbermaid home goods such as outdoor refuse containers would be affected, other parts of Rubbermaid such as the food and commercial segments were expected to remain intact.

"Neither Rubbermaid Commercial nor Rubbermaid Food will be affected by this and yet both of them are resin-intensive," Ketchum said. "It's the ability of those categories to respond to innovation and brand-building investments."

Atlanta-based Newell also said it plans to raise prices in the second half of this year, with some increases as high as 22 percent.

Newell's move comes a day after Kimberly-Clark Corp (KMB.N), which makes tissue and diapers, cut its full-year outlook and said rising materials costs might force it to implement more price increases.

In addition to oil, Newell Rubbermaid also said that costs of steel and natural gas were dramatically higher than a year ago.

"We're seeing hyper-inflation in a lot of categories," Ketchum said. But he noted "the biggest wild card is oil."

The company cut its full-year outlook to a range of $1.40 to $1.60 a share, a range that Ketchum said takes into account the possibility that oil could soar to $200 a barrel. "We're covering for a fairly pessimistic case," Ketchum said.

In April, Newell Rubbermaid had forecast full-year profit of $1.80 to $1.90 a share.

The company backed a previous forecast for second quarter earnings in the range of 47 cents to 50 cents a share.

Newell expects restructuring costs of $80 million to $100 million, or $68 million to $85 million after tax, from the downsizing or divestiture moves, which are expected to be completed within a year.

Analysts expected profit of 48 cents a share for the second quarter and $1.76 a share for the full year, according to Reuters Estimates.

Newell Rubbermaid shares, trading at a year low, were up 31 cents, or 2 percent, to $15.75 in morning trading on the New York Stock Exchange trading after earlier touching a year low of $14.89.

Kimberly-Clark shares fell $2.06, or 3.5 percent, to $56.74. (Reporting by Karen Jacobs)