R.J. Reynolds Cutting Back
WINSTON-SALEM, N.C. -- R.J. Reynolds Tobacco Holdings will cut some 635 jobs, or 8 percent of its work force, and sell two non-tobacco businesses as it attempts to reduce costs and compete more effectively amid growing competition from lower-priced cigarette brands. The maker of Winston, Salem and Camel cigarettes also said its earnings for 2002 earnings would be at the lower end of its most recent projection for the year and below Wall Street's consensus projection.
The job cuts, which include 520 layoffs as well as failing to fill another 115 jobs when they become vacant, are expected to be completed by the middle of next year.
The number-two tobacco company estimates that cutting its work force will save about $50 million next year and $75 million in 2004. The company also said it plans to sell two businesses, divisions that specialize in packaging and botanical extraction, the Associated Press reported.
"The decisions regarding job eliminations and divestitures have been very difficult, but the realities of today's cigarette marketplace demand that we realign our cost structure," said Andrew Schindler, chairman and CEO.
RJR has said repeatedly this year that it has been forced to increase promotional spending on its premium brands to defend itself from aggressive deals being offered by Philip Morris, maker of the nation's leading cigarette brand, Marlboro.
It has also faced growing competition from deep-discount brands and the effect of higher state excise taxes. "By reducing costs and focusing on our tobacco businesses, we can strengthen our return to shareholders and compete more effectively," Schindler said.
RJR plans to take a restructuring charge of about $235 million in the fourth quarter. The company attributed about $95 million of the restructuring charge to costs associated with the job cuts, including $65 million in severance payments. The company said about $140 million of the restructuring charge will come from the business sales.
The job cuts, which include 520 layoffs as well as failing to fill another 115 jobs when they become vacant, are expected to be completed by the middle of next year.
The number-two tobacco company estimates that cutting its work force will save about $50 million next year and $75 million in 2004. The company also said it plans to sell two businesses, divisions that specialize in packaging and botanical extraction, the Associated Press reported.
"The decisions regarding job eliminations and divestitures have been very difficult, but the realities of today's cigarette marketplace demand that we realign our cost structure," said Andrew Schindler, chairman and CEO.
RJR has said repeatedly this year that it has been forced to increase promotional spending on its premium brands to defend itself from aggressive deals being offered by Philip Morris, maker of the nation's leading cigarette brand, Marlboro.
It has also faced growing competition from deep-discount brands and the effect of higher state excise taxes. "By reducing costs and focusing on our tobacco businesses, we can strengthen our return to shareholders and compete more effectively," Schindler said.
RJR plans to take a restructuring charge of about $235 million in the fourth quarter. The company attributed about $95 million of the restructuring charge to costs associated with the job cuts, including $65 million in severance payments. The company said about $140 million of the restructuring charge will come from the business sales.