Newell slashes forecast and jobs
CHICAGO (Reuters) - Newell Rubbermaid (NWL.N) slashed its fourth-quarter profit and sales forecasts on Wednesday, blaming a deep slump in the global economy, and said it would cut up to 10 percent of non-manufacturing jobs.
Shares in the consumer products maker sank as much as 12.6 percent in premarket trade.
Newell, which makes Rubbermaid storage products, Sharpie pens and other household and office items, also froze wages and salaries and said it would temporarily halt some production as it works on reducing inventory levels.
"The unprecedented rapidity of the economy's decline makes it difficult to anticipate an economic rebound any time soon," Chief Executive Mark Ketchum said in a statement. "Our expectations are for a more challenging business environment in 2009 than any we've seen to date."
Ketchum said the company is seeing "extraordinary volatility, weaker than expected demand, and customer inventory reductions" across its markets, and that trends were worsening near the end of the fourth quarter.
Newell said it would cut 8 percent to 10 percent of its salaried jobs. It said the cuts, which already have begun, would continue into 2009.
The job cuts represent about 800 to 1,000 professional and managerial positions, a spokesman said. Newell has about 20,000 employees worldwide, but about half of those, which are manufacturing jobs, would be unaffected by the announced job cuts, he said.
Newell also said that starting on January 1 there would not be any pay increases for the entire year.
Newell now expects fourth-quarter normalized per-share earnings of 6 cents to 10 cents, down from its prior forecast of 29 cents per share to 34 cents per share. Analysts, on average, had expected the company to earn 32 cents per share, according to Reuters Estimates.
It now expects fourth-quarter sales to fall in the low teens percentage range, after previously expecting sales to be flat to down 2 percent.
The announcement comes less than two months after Newell cut its full-year earnings forecast on expectations a weak economy would take an even bigger bite out of sales.
On October 30, Newell cut its full-year earnings forecast to $1.40 to $1.45 per share. It now expects to earn $1.17 per share to $1.21 per share. Analysts' average forecast was $1.43 per share.
The company plans to temporarily shut down some of its manufacturing facilities to reduce inventory. Office products is one area where the shutdowns are planned.
Newell said it would give more details on these and other plans when it reports fourth-quarter results on January 29.
Shares of Newell were down 10.5 percent to $11.80 in premarket trade after falling as low as $11.52. The shares fell 49 percent from the start of the year through Tuesday.
(Reporting by Jessica Wohl in Chicago and Aarthi Sivaraman in New York, editing by Dave Zimmerman)
