--Newell unveils further restructuring that cuts about 2,000 jobs
--Reorganization borrows from playbook Newell CEO Michael Polk implemented at Unilever
--Third-quarter earnings swing to profit, topping expectations
--Newell also boosts dividend 50%
(Updates throughout, including details and comments from earnings call and interview with CEO.)
By Paul Ziobro
Newell Rubbermaid Inc. (>> Newell Rubbermaid Inc.) unveiled more restructuring that will cut roughly 2,000 jobs and reorganize the company in a way that borrows from the playbook Chief Executive Michael Polk implemented at his former employer Unilever NV (>> Unilever N.V.).
Newell disclosed the expansion of an ongoing restructuing as it swung to a third-quarter profit from a year ago, when it was bogged down by impairment charges. Per-share earnings were ahead of analyst estimates on higher gross margins, while sales, excluding currency translation, rose 1.5%. Newell also backed its outlook for the year.
In another bit of positive news, Newell bumped up its dividend 50% to 15 cents a share, putting it at the high end of its target payout that it was planning to achieve.
The results and restructuring, which Newell says will get it growing at a faster clip sooner than expected, pushed Newell shares up 4.5% in early trading to $20.99, bringing year-to-date gains to nearly 30%.
Newell becomes the latest company to signal that it is making further cost cuts in the current environment. In addition to laying off about 10% of its global workforce, Newell's latest restructuring, which will add up $225 million by mid-2015 to the current restructuring plan, cuts the number of global business units to six from nine by merging some similar divisions, like its writing business, which held the Sharpie marker brands, with fine-writing, which sold high-end Parker and Waterman pens.
It will also reorganize the company into a development organization, which will focus on managing brands, coming up with new products and marketing, and a delivery organization, whose focus will be on managing relationships between retailers and suppliers and executing sales strategies. Friday, Mr. Polk said dividing the responsibilities along those lines is similar to a strategy he helped implement in 2006 at Unilever, where he rose to a top job before leaving in 2011 to join Newell.
"The model we are now moving to drove significantly improved performance at my former company and it will do the same at Newell Rubbermaid," Polk said.
Newell also made several management shake ups, including some appointing several former Unilever executives to key roles at Newell. The most significant is Mark Tarchetti, the former head of corporate global strategy at Unilever, who is joining Newell in January as chief development officer to head the development organization.
The executive changes indicate that Mr. Polk "is using his [consumer-packed goods] Rolodex and Unilever ties to upgrade the management team at Newell," Morgan Stanley analyst Dara Mohsenian said in a research note.
Newell's third-quarter results otherwise showed continued progress by the company, which also makes Rubbermaid storage products, Calphalon cookware and some accessories for industrial tools, to establish a steady pattern of growth, unlike choppy results for the better part of the previous decade when the company was under constant overhaul. The strategy includes investing more behind businesses with better growth prospects in emerging markets, like Sharpie.
In an interview, Mr. Polk said the latest cost cuts are different from past restructuring because it focuses on reinvesting savings into growth plans, rather than just boosting the bottom line.
"I don't view this as a cost play," Mr. Polk said. "Our structure is now following our strategy."
For the quarter, Newell Rubbermaid reported a profit of $108.3 million, or 37 cents a share, compared with a year-earlier loss of $177.6 million, or 61 cents a share. The year-ago period included $1.05 a share in impairment charges. Excluding those charges and other items, earnings were up 47 cents from 45 cents a share.
Sales fell 0.9% to $1.54 billion, hurt by currency translation. Sales, excluding currency effects, were up 1.1.% in North America, and down 2.8% in Europe, the Middle East and Africa due to ongoing challenges in Europe. Latin America and Asia Pacific sales were up 11.3% and 6.3%, respectively, excluding currency effects.
Analysts surveyed by Thomson Reuters expected earnings of 44 cents a share on revenue of $1.54 billion.
--Ben Fox Rubin contributed to this article.
Write to Paul Ziobro at email@example.com
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