Newell Rubbermaid (NYSE:NWL) swung to a third-quarter loss and announced a restructuring plan on Friday that will slash 500 jobs as it tries to revamp operations and focus on its most profitable businesses and grow overseas.
However the company still reaffirmed its fiscal view, expecting a profit of $1.55 to $1.62 a share, which is better than analysts’ forecasts of $1.55.
The Atlanta-based maker of consumer products such as garbage bags and paper plates says Project Renewal is an initiative that it says will simplify and realign the company’s structure so as to free up resources to be reinvested for profitable growth.
Newell Rubbermaid expects to achieve savings from the plan starting in January of about $90 million to $100 million over the next 12 to 18 months from the deal.
It will then reinvest a majority of those funds back into the business to increase brand building support, strengthen demand creation capabilities and develop in business system in emerging markets.
The sharpie manufacturer will consolidate two manufacturing plants and two distribution centers as part of the turnaround. It will dismantle an operating group so that it can focus on just two, one for consumers and the other for the professional market.
Shares of Newell Rubbermaid were up more than 12% to $15.49 at 10AM EST.
The company posted a net loss of $177.6 million, or 61 cents a share, compared with a year-earlier profit of $28.3 million, or 10 cents a share, in the same quarter last year.
The company’s results were hurt by rising costs that could not be wholly offset by increased prices.
Excluding one-time items, the company said it would have earned 45 cents, which is ahead of average analyst estimates polled by Thomson Reuters of 45 cents.
Revenue for the three months ended Sept. 30 was $1.55 billion, up 5.8% from $1.46 billion a year ago, just missing the Street’s view of $1.56 billion.
“These are good numbers in the context of a really tough macro environment and represent progress towards our goal of delivering consistent predictable results and sustainable profitable growth,” Newell Rubbermaid CEO Michael Polk said in a statement.
Polk called the results a “solid step forward,” highlighting the fact that core sales, operating income margin and operating cash flow all improved and came in as expected.