* To cut more than 10 pct of staff over 2-1/2 years
* To consolidate manufacturing, distribution facilities
* Quarterly profit tops estimates; sales in line
* Raises quarterly dividend by 50 pct
* Stock hits four-year high
By Dhanya Skariachan
Oct 26 Consumer products maker Newell Rubbermaid
Inc said it will cut about 2,000 jobs, or slightly more
than 10 percent of its staff, over the next 2-1/2 years, joining
a slew of U.S. companies trying to counter slowing sales by
Newell on Friday also reported a higher-than-expected
quarterly profit, raised its quarterly dividend by 50 percent to
15 cents a share and announced a number of outside additions to
its executive team.
Its shares rose as much as 5.5 percent to their highest
level in four years.
The maker of Sharpie pens and Rubbermaid storage containers
also plans to consolidate manufacturing and distribution
facilities and cut the number of its business units to six from
nine in a second round of restructuring under Chief Executive
Mike Polk, a former Unilever Plc executive who took the
Newell helm in July 2011.
Polk is now reorganizing the company around two broad groups
- development and delivery.
Development will include all of Newell's marketing, insight,
design, research and development, and corporate development
staff, while delivery will consist of its general management,
supply chain, and customer and channel development employees.
The moves will save $180 million to $225 million by the end
of the second quarter of 2015, the company said. It expects to
take related charges of $225 million to $250 million.
"We like the progress that Newell is making under CEO Mike
Polk," BMO Capital Markets analyst Connie Maneaty said,
applauding his efforts to "funnel investment toward its most
promising businesses and geographies."
She has an "outperform" rating on the stock.
While the consumer products maker plans to eventually use
the savings to invest in key Latin American markets such as
Mexico, Columbia and Brazil, as well as in China, Polk told
Reuters that Newell was being very careful with investments over
the near term as the so-called "fiscal cliff" looms.
"This is the real political issue out there ... and it's
bigger than the election," Polk said, referring to the automatic
spending cuts and tax increases set to take effect on Jan. 1 if
the U.S. Congress fails to act.
"We are being really cautious about (the) kinds of
investments we make and the kinds of risks we are taking in this
environment," Polk said, adding that retailers who do business
with Newell are being "very, very tight-fisted" in managing
Several top executives will leave the company, including
Penny McIntyre, who headed the consumer business, Ted Woehrle,
the chief marketing officer, and Paul Boitmann, the chief
customer development officer, Newell said.
SWING TO QUARTERLY PROFIT
In October 2011, Polk announced plans to consolidate
Newell's manufacturing plants and distribution centers and
reduce the number of global business units.
The company, which also makes Graco strollers, Calphalon
cookware and Paper Mate pens, has benefited from a move away
from commoditized, lower-margin products like shelving and
wooden pencils. That effort began under former CEOMar k Ketchum.
Newell said it swung to third-quarter net income of $108.3
million, or 37 cents a share, from a year-earlier net loss of
$177.6 million, or 61 cents a share.
Excluding restructuring costs, tax charges and other items,
the profit came to 47 cents a share, beating the analysts'
average estimate of 44 cents, according to Thomson Reuters
Price increases and measures to improve productivity helped
Newell offset high raw material costs in the quarter.
Net sales fell 0.9 percent to $1.54 billion, in line with
analysts' estimates. Core sales, excluding the effects of
currency fluctuations, rose 1.5 percent.
For the year, the company expects net sales to be flat to up
1.5 percent and core sales to rise 2 percent to 3 percent.
Newell stood by its full-year profit forecast of $1.63 to
$1.69 a share, excluding special items.
Earlier this week, companies like Dow Chemical Co
and Colgate-Palmolive Co said they will cut jobs to
protect profits in a weak global economy.
Also as part of the restructuring, Newell hired several
Mark Tarchetti, the former head of global corporate strategy
at Unilever, will join Newell in January as chief development
officer and lead the new development group.
William A. Burke III, currently group president of Newell
Professional or the unit that caters to commercial customers,
was appointed chief operating officer and will lead the new
Both Tarchetti and Burke will report to CEO Polk.
Unilever executive Joe Cavaliere will join Newell as global
chief customer officer. Richard Davies, also with Polk's former
employer, will become chief marketing and insights officer.
John Stipancich will remain chief legal officer and general
counsel and take charge of operations in Europe, the Middle East
Newell shares were up 87 cents, or 4 percent, at $20.90
Friday morning on the New York Stock Exchange. Early in the
session, the stock went as high as $21.19.