The cuts had been well signalled as part of the company's Organisation 2005 restructuring. But the announcement to analysts and the costs associated sent the company's stock price down from 94.25 to 91.25 at lunchtime yesterday.
"P&G expects Organisation 2005 to increase long-term annual sales growth to 6-8 per cent and accelerate earnings per share growth (excluding program costs) to 13 to 15 per cent in each of the next five years, through fiscal 2004," the company said. "The Organisation 2005 program will cost $1.9bn after tax and affect 15,000 jobs worldwide over the time period, beginning this fiscal year. The program is anticipated to generate annual after- tax savings of about $900m by fiscal 2004."
The job cuts account for about 13 per cent of the company's workforce. They will be disproportionately high in Europe, raising fears about its facilities in Britain. The company confirmed that Newcastle will be the site for one of its new Global Business Units for the Europe, Middle East and Africa region, but it has several other manufacturing facilities in Britain.
Around 6,200 jobs will go in Europe but a P&G spokesman in Britain said the UK business was not expected to see significant cuts. "The figure might not even be as high as several hundred."
"The cost of Organisation 2005 is well-justified by both the ongoing operational benefits of our new structure and the substantial financial benefits it will generate for shareholders," said Durk Jager, the new chief executive.Reuse content