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Procter & Gamble (PG) restructuring program well ahead of goals

P&G cut 5,850 jobs through January

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CINCINNATI - Procter & Gamble Co. has eliminated 5,850 non-manufacturing jobs through the end of January, exceeding its initial goal of 5,700 positions five months ahead of schedule.

P&G announced the numbers at a Florida investor conference sponsored by the Consumer Analyst Group of New York. It also reaffirmed its earnings guidance for the 2013 fiscal year, guidance that was recently reduced by currency issues in Venezuela.

P&G Chief Financial Officer Jon Moeller said the job reductions represent just one example of how P&G is making better progress than initially promised in a restructuring program aimed at saving $10 billion by 2016. He said the company’s top leaders are increasingly convinced that the cost savings program will fuel a global expansion of P&G brands well into the future.

"There's a massive opportunity to be seized here and I think that's more clearly seen than it was in the past and has broader commitment to it,” Moeller said. “It's no proof of future success but you clearly see it in the current year, where we're not struggling to deliver the numbers. We're over delivering the numbers and, importantly, doing that without significant business disruption, which gives me a lot of confidence to keep pushing."

P&G has enjoyed a rising stock price in recent weeks, as investors react to improvements in market share and profits. Moeller highlighted several areas where cost-cutting programs are ahead of expectations, including a productivity initiative that will allow P&G to open 20 new factories all over the world without increasing its manufacturing employment, which stood at 80,000 at the start of 2012. P&G’s goal was a 5 percent annual productivity improvement. Through the first half of 2013, it achieved a 6.5 percent improvement.

Similarly, Moeller said P&G has made enough progress on a $1.2 billion cost-savings goal in its costs of goods sold that it’s now established a “stretch goal” of $1.4 billion.

One of P&G’s biggest critics could be softening his stance. Bernstein Research analyst Ali Dibadj said this morning that he’s convinced P&G’s restructuring made the company less bureaucratic.

“I’ve heard that it’s actually simplified things internally,” Dibadj said via email.

Riverpoint Capital Management Managing Director Victor Lassandro said P&G is building momentum that could lead to a stock price above $80, but only if it delivers higher than expected earnings in the next few quarters.

“They look to be picking up momentum,” he said. “I think there’s a good possibility.”

P&G shares were down 17 cents to $76.92 in late morning trades.

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