15,000 Jobs to Be Cut by Procter & Gamble

Procter & Gamble Co. said Wednesday that it will trim 15,000 jobs worldwide, close about 10 plants and take charges of $1.9 billion under its 9-month-old restructuring plan.

The nation’s largest maker of household products, whose brands include Tide detergent, Crest toothpaste and Pampers diapers, said the moves will save $900 million a year that it can spend on new products. P&G; in September said it would organize its business along product lines, instead of regions.

Durk Jager, who became chief executive in January, wants to tame bureaucracy at the 162-year-old company and help speed the development of new products and their delivery to stores around the globe. P&G; expects sales to eventually rise as much as 8% annually, double its average in the last five years.

P&G;’s shares slipped $2.56 to close at $92.25 on the New York Stock Exchange, as the company said the reorganization would have an insignificant impact on profit in the next year and warned that unit sales would be flat or lower in its fiscal fourth quarter. Analysts were expecting the number of products sold to be up 1% to 2% for the quarter.

Wall Street had bid up P&G; stock late last week in anticipation of the restructuring.

“People have run out of patience,” said analyst Ajay Mehra at Columbia Management, which holds 32,000 shares and has been selling its stake this year. “Earnings aren’t the issue. There’s no volume growth. We’ve had empty promises for three quarters,” he told Bloomberg News.

The job cuts make up about 13% of Procter & Gamble’s work force, and will be largely outside the U.S. The first round of cuts, about 10,000 jobs, will occur by fiscal 2001. About 29% of the cuts will be made in Northern California. P&G; didn’t identify any individual plants targeted for closure.

Under the program, dubbed Organization 2005, Cincinnati-based P&G; will move from four business units based on geographic regions to seven global business units based on product lines.

The moves and charges against earnings will be spread over the next five years.

P&G; told analysts and investors at a meeting in New York that it expects the plan to boost annual earnings-per-share growth to 13% to 15% for the next five years and increase sales by 6% to 8%.

P&G; executives agreed with analysts’ estimates of 11% earnings-per-share growth for the current year and said they expect fiscal 2000 profit to be at the low end of its targeted 13% to 15% range.

The plan is P&G;’s second big reorganization in the last decade. P&G; launched a major restructuring in 1993 that cut 13,000 jobs, or 12% of its work force, and closed 30 plants. That program, which cost $2.4 billion by its completion in 1997, saved $600 million a year.