shares gained early Tuesday after the consumer products company announced a restructuring plan, which includes a 12% payroll cut.
The New York based company's four-year "restructuring and business-building plan will result in cumulative charges of $550 million to $650 million after tax, beginning with approximately $45 million in fourth-quarter 2004. The measures are expected to save $250 million to $300 million after tax annually by the fourth year of the program.
In 2005, the plan will mean charges of approximately $200 million and after tax savings of approximate $45 million.
The plan is expected to increase profits through cost savings, accelerate innovative marketing and new products and worldwide market shares. Colgate will trim 4,400 of its 37,000 employees under the plan.
The company also reaffirmed fourth-quarter 2004 and full-year 2005 EPS forecasts excluding restructuring charges. The consensus estimates are for 58 cents and $2.61 a share, respectively.
Colgate shares were hammered in late September when it warned about second-half earnings, blaming higher marketing costs. At the time, the company, best known for its toothpaste and soap, said it expected EPS of 57 cents to 59 cents in the fourth quarter.
The company said "many of these initiatives are already underway, and others will be in the operational phase shortly."
In premarket trading, shares were up 71 cents, or 1.5%, to $47.00.