P&G to cut thousands of jobs in next 2 years

Procter & Gamble will cut another 3,000 to 6,000 office jobs worldwide in the next two years, senior executives said Thursday. An unknown number of cuts could occur in Cincinnati, where the company is headquartered and has only 90 manufacturing jobs.

Details of the additional job cuts came as chief financial officer Jon Moeller updated analysts and reporters after the company posted lackluster financial results for P&G's third quarter. P&G has been cutting thousands of jobs since February 2012, when it first announced it would slash 5,700 jobs or 10 percent of its nonmanufacturing jobs.

In the last three years, P&G has cut a total of nearly 11,000 office jobs and another 10,000 manufacturing jobs worldwide.

On Thursday, Moeller said P&G would end up cutting 25 to 30 percent of office jobs by mid 2017. The company has already cut 19 percent of those positions.

"We're increasing our overhead enrollment reduction target... reflecting additional opportunities we see," Moeller said.

In P&G factories, Moeller explained that the company has achieved a net reduction in jobs despite a worldwide factory building boom. He added the company plans at least another 18 projects for new or expanded plants in overseas markets.

Moeller's update built on previous job cutting guidance that predicted 18 to 22 percent of nonmanufacturing jobs would be cut by the end of this fiscal year and that company would target additional cuts of 2 to 4 percent a year going forward.

P&G provided no guidance about future manufacturing job cuts. It also did not break out local impact in Greater Cincinnati. P&G employs roughly 11,000 in the region.

The update came after P&G reported disappointing revenue results and lowered its sales outlook as foreign exchange took a deeper toll.

P&G reported a $2.2 billion quarterly profit – a 17 percent decrease from the same period a year ago. The consumer products giant's bottom line took a $300 million after-tax hit from a noncash charge against its Duracell batteries business that it is in the process of selling.

Last year, P&G netted a $2.6 billion profit on $20.6 billion during the third quarter.

Sales declined 8 percent to $18.1 billion for P&G's fiscal third quarter ended March 31. Organic sales – which excludes the impact of foreign exchange, divestitures or acquisitions – rose 1 percent.

P&G's 92 cents of core earnings per share were in line with analyst estimates, but its sales fell short.

The company also said foreign exchange shaved 8 percent off its sales results and divestitures of minor brands cut another 1 percent.

P&G lowered its sales guidance for the fiscal year ending June 30: sales will be down 5 to 6 percent versus a February forecast that said sales would decline 3 to 4 percent; the company said organic sales would climb by low single digits instead of an increase in the low-to-mid single digits range outlined in January.

The company also said currency rates would have a bigger impact on annual sales than previously outlined: cutting sales 6 to 7 percent, up from the 5 percent forecast in January.

P&G shares declined $1.48 or 1.8 percent to close at $80.95 on Thursday.

"Our third quarter earnings results were largely in-line with what we had expected," said CEO A.G. Lafley in a statement. "We are focused on the significant opportunities in our control, including brand initiatives and product innovation, business and brand portfolio simplification, overhead savings and major supply chain productivity initiatives - to improve results in 2015 and beyond."

Wall Street has been abuzz this month with speculation that P&G was close to announcing a raft of beauty brand divestitures and possibly a CEO succession plan. But P&G offered no major updates on those fronts.

On a conference call with Moeller, some analysts appeared to be growing impatient with P&G's turnaround progress.

"We've been hearing a lot of promise that help is around the corner for years, years... Now the promise is wait til we break up 14 percent of sales, 6 percent of operating profit out of our business, things will be much better," said Bernstein analyst Ali Dibadj. "How much longer would we have to wait for you guys to decide maybe something even bigger has to happen?"

Moeller replied P&G was in "probably the biggest transformation the company has gone through" and more time was needed.

"It's hard to see that all come together at this point... We're happy with the progress and we'll see," Moeller said.

P&G is in the midst of selling off or exiting 100 noncore brands in an attempt to restore focus and consistent profit and sales growth. Lafley has said most brand sales would disclosed by as early summer.

Speaking at a February conference, P&G executives said once the brand-shedding was complete that the company's $83 billion in sales would be about $11 billion smaller.

So far, the biggest brands to go are Duracell batteries, which will be sold to Warren Buffett's Berkshire Hathaway this fall, and Iams and other pet brands, which were sold off last year. P&G has also divested several small fragrance labels, overseas laundry brands, a couple of health ventures, and Camay and Zest soaps.

There has also been widespread speculation on Wall Street this month about a potential update by P&G to name a successor to Lafley.