PepsiCo announced plans on Tuesday to cut 3,300 jobs and close six plants as it deals with lagging U.S. drinks sales and a surging dollar, which will hurt profits from its rapidly growing international business.
The announcement came as the global snacks and drinks maker reported a 9.5 percent drop in third-quarter profit and offered a downbeat profit outlook.
The job cuts amount to roughly 1.8 percent of PepsiCo's global work force of about 185,000 employees. The cuts will affect managerial and factory jobs both in and outside the U.S. Most will be eliminated in the coming months, Chief Financial Officer Richard Goodman said.
The second-largest U.S. drink maker said it expects to generate a pretax savings of more than $1.2 billion over the next three years, with $350 million to $400 million to be saved in 2009.
"While we can't control the macro economic situation, we can enhance PepsiCo's operating agility to respond to the changing environment," Chief Executive Indra Nooyi said in a statement.
In the third quarter, company had net income of $1.58 billion, or 99 cents a share, compared with $1.74 billion, or $1.06 per share, a year ago. Revenue grew to $11.2 billion in the most recent period from $10.17 billion a year ago.
Analysts surveyed by Thomson Reuters, who typically exclude items from estimates, expected earnings of $1.08 per share on revenue of $11.2 billion.
Purchase, New York-based PepsiCo Inc. also noted that the recent surge in the U.S. dollar will hurt fourth-quarter profit. At current rates, the incremental impact would be about 4 cents to 5 cents per share.
As a result, the company now expects to report 2008 earnings per share of $3.67 to $3.68, compared with prior guidance of $3.72. Analysts expected $3.74 per share for the full year.