A Fresh Spin
Procter & Gamble Announces Massive Job Cuts: 7,000 Employees to Lose Their Positions as Part of Restructuring Measures
Procter & Gamble (P&G) is slashing around 15% of its non-production workforce—approximately 7,000 jobs—as part of a two-year overhaul, executives revealed at a conference this week.
The consumer titan aims to kick off this transformation in its upcoming fiscal year. CFO Andre Schulten shared this news at a gathering in Paris, suggesting that the revamp will involve alterations to P&G's portfolio, supply chain, and potential abandonment of specific brand categories. The layoffs are estimated to cost between $1 billion and $1.6 billion.
Schulten stated, "We see potential to make growth more diverse while streamlining teams, making work more engaging, faster, and more efficient, harnessing the power of digitization and automation." He further explained, "By doing this, we expect to eliminate up to 7,000 non-production roles, equating to about 15% of our current non-production workforce."
At present, Schulten hasn’t pinpointed any particular brands or segments that P&G might abandon or sell off. However, he hinted that there would be more disclosures when the company announces its next quarterly earnings, scheduled for July 29.
Apart from this revamp, P&G's top brass shed light on the anticipated impact of tariffs. They announced that P&G could experience a 3-cent to 4-cent dip in earnings per share in its fiscal fourth quarter due to tariffs. Schulten cautioned that these circumstances might change, but as of now, the firm foresees a pre-tax obstacle of about $600 million if the tariffs stay in place through fiscal 2026.
In its latest quarterly report issued in April, P&G showcased better profits but lower sales than forecasted. At the same time, it revised its sales and profit targets for the entire fiscal year.
Despite the upcoming restructuring, P&G shares remained relatively unchanged on Thursday, and have only dipped by 1% since the start of the year.
Insights:
P&G is refocusing its brand portfolio with a greater emphasis on powerful, high-margin brands, such as Tide and Pampers, and intends to phase out underperforming brands and markets. Brands like Vidal Sassoon in China, and geographic markets like Argentina, are potential candidates for exit or divestiture. The company will shed light on the specifics during its fiscal Q4 earnings call next month.
[1] (Source): https://www.marketwatch.com/story/pg-expects-tariffs-to-hit-earnings-by-3-cents-to-4-cents-per-share-in-fourth-quarter-2022-03-17[2] (Source): https://finance.yahoo.com/news/pg-eyes-restructuring-efforts-161100886.html[3] (Source): https://www.foxbusiness.com/markets/pg-supply-chain-changes[4] (Citation unknown)[5] (Citation unknown)
- The restructuring at Procter & Gamble (P&G) might also include changes in the finance sector, as the company aims to eliminate up to 7,000 non-production roles, which is around 15% of their current workforce, to streamline teams, leverage digitization, and boost efficiency.
- In the token industry, P&G's forthcoming fiscal year could witness significant changes, as the company is refocusing its brand portfolio, potentially abandoning underperforming brands and markets, such as Vidal Sassoon in China and possibly Argentina, to make growth more diverse and invest in powerful, high-margin brands like Tide and Pampers.
