Manufacturing and distributing home-and-office supplies can be a tough business. There are tons of competitors. Big retail chains aren't going to pay top dollar for product. Instead, they squeeze suppliers.
The Great Recession hasn't helped, and high oil prices have pushed up the price of raw-material and transportation costs. So what's a company like Newell Rubbermaid (NWL) — which makes brands like Calphalon cookware, Sharpie pens, and Graco baby products — to do?
Exactly what it has been doing. The company has been restructuring its operations via Project Acceleration, which wrapped up in 2010.
"This multiyear restructuring program was designed to consolidate and streamline our manufacturing and supply-chain operations to achieve greater efficiency and best cost," says company CEO Mark Ketchum in an earnings statement.
"Since the inception of Acceleration, we have reduced our manufacturing footprint by 60 percent and optimized our distribution and transportation network."
This year, the program should yield results, management reports. "By the end of 2011, we will have delivered in excess of $220 million in annualized savings. Project Acceleration required significant effort and resources, and with that hard work behind us, we are now better able to focus on growth," Ketchum adds.
Restructuring appears to be working. Net sales for the 12 months ended Dec. 31, 2010, increased 3.3 percent to $5.76 billion, compared to $5.58 billion in the prior year, the company reports. Sixty-nine percent of sales were in the United States.
Net income hit $292.8 million, up slightly from the $285.5 million reported a year earlier.
Meanwhile, the company is planning to complete a European streamlining process by the end of 2012 it believes will increase profitability by up to $65 million.
Newell Rubbermaid expects core sales to increase four to five percent in 2011 and earnings per share growth of between 10 percent and 12 percent. The company reports earnings Friday.
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