Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, September 21, 1995 TAG: 9509210065
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
The consumer products maker, known for its Ajax, Colgate and Palmolive brands, said the restructuring announced Wednesday would result in a third-quarter aftertax charge of $369 million and a loss for that period.
In addition, the New York-based company said its earnings would be reduced for the remainder of the year because of the dismal situation in Mexico, an important market for Colgate's array of soaps and cosmetics.
In a statement, Colgate said the Mexican recession ``has worsened as the year progressed, reducing employment and real wages to the point that the consumer categories in which we compete have shrunk significantly.''
Shares of Colgate slumped more than 9 percent after the early morning announcement and stayed lower throughout the trading day. Shares closed at $67.121/2, down $4.621/2 on the New York Stock Exchange.
Colgate joins a number of other consumer products makers that have cut costs and revamped their businesses to better deal with the Mexico financial crisis and intensified competition around the world.
``There were a lot of factors this year putting pressure on these companies, like higher packaging costs and a slowdown in the European and Mexican markets,'' said Douglas Christopher, an analyst at Crowell, Weedon & Co. in Los Angeles. ``Colgate had to make an aggressive move to be more efficient in order to see any improvement in the long term.''
Under the restructuring plan, Colgate will close or significantly alter operations in 24 of its 112 factories and eliminate about 3,000 jobs from its work force of about 36,000, Chairman and Chief Executive Officer Reuben Mark said.
by CNB