--Procter & Gamble plans to cut nonmanufacturing jobs
further
--Boosts fiscal 2013 share buyback program by 50%
--Announces plans ahead of biennial meeting with analysts
(Adds detail on latest buyout program in 6th paragraph, and
updates shares.)
By Paul Ziobro
Procter & Gamble Co. (PG) announced plans to possibly cut
more than twice as many nonmanufacturing jobs than it had already
planned, a further sign that it is heeding analyst and investor
criticism over its bloated cost structure.
P&G also said it is boosting its share buyback program this
fiscal year by 50% to $6 billion, a figure that may move higher if
the company can generate more cash than anticipated.
The world's largest consumer-product company Thursday disclosed
plans to cut its nonmanufacturing workforce by an additional 2% to
4% annually through fiscal year 2014 to 2016. That comes on top of
plans to reduce its nonmanufacturing jobs by 10%, or 5,700, by the
end of its current fiscal year ending June 30.
The top end of the job-cut projections would further reduce
P&G's nonmanufacturing workforce by an additional 5,900.
"We're working to make productivity an ingrained part of our
culture, similar to innovation," P&G Chief Executive Bob
McDonald said during the company's biennial meeting with analysts.
"Always present, always important."
P&G's latest buyout program ended Oct. 31. For those lower
in management, it included about six months of salary plus benefits
and options, according to former employees who recently took the
buyout. P&G ranks its employees based on performance with the
No. 1s accounting for the top 10% of the company. Most employees
allowed to take the buyout weren't in the 1 category except in
special circumstances, former employees and executives say.
P&G, which also backed its fiscal 2013 outlook Thursday, has
taken several steps over the past year to lower costs and refocus
its business on a narrower set of business lines, countries and new
products. In February, the company unveiled a $10 billion
restructuring program that looks to save money on everything from
raw materials to marketing costs, and recently hinted that the
target may go higher.
The company also recently created a new position focusing on
cutting costs and reorganizing the organization, which was recently
filled by Jorge Uribe, a longtime P&G executive who recently
headed the company's Latin American region.
The changes have come as pressure has ratcheted up on P&G,
from inside and outside the company, over the company's lackluster
performance in recent years, where it has been outperformed by
global competitors like Colgate-Palmolive Co. (CL). The most
notable criticism has come from William Ackman, whose Pershing
Square Capital Management has amassed a $1.8 billion stake in
P&G, and who has pushed for deeper cost cuts, as well as the
replacement of Mr. McDonald.
P&G shares have responded from Mr. Ackman's overtures and
strategic changes. Following last month's better-than-expected
first-quarter results, P&G shares hit a new four-year high of
$70.83, although they have retreated a bit since then. In recent
trading, they were down 0.9% to $66.92.
P&G still faces challenges, including the loss of market
share in most of its businesses. The company's share losses have
moderated as the company has cut prices on items like Gillette
razors and powdered laundry detergent in the U.S.
--Emily Glazer and Melodie Warner contributed to this article.
Write to Paul Ziobro at paul.ziobro@dowjones.com
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