Johnson & Johnson To Restructure, Cut Jobs
Johnson & Johnson said Tuesday it will trim layers of management, cut jobs, and set other restructuring moves in order to save up to $900 million next year.
The New Brunswick, N.J., company said the job cuts will affect 6 to 7 percent of its global work force of roughly 118,700 workers, prompting a restructuring charge of up to $1.3 billion pretax in the fourth quarter. Still, the company confirmed adjusted profit guidance between $4.54 and $4.59 per share for 2009.
Johnson & Johnson says it will also simplify its business structure in order to achieve savings and projects that it will save between $1.4 billion and $1.7 billion annually after the restructuring is complete in 2011.
The company, the world's most diversified health-products maker, saw its revenue fall 5 percent in the third quarter as intensifying generic competition slashed sales of about a half-dozen of its prescription drugs, including the schizophrenia drug Risperdal and the epilepsy treatment Topamax.
"Johnson & Johnson has long adhered to a broad-based operating model and set of sound management principles that have driven our success," said Chairman and CEO William C. Weldon, in a statement, adding that the program should keep the company positioned for long-term growth in the health care industry.
"These types of changes are difficult under any circumstances, and will have a very personal impact on people who have been dedicated to the mission of Johnson & Johnson," he said. "We recognize their contributions to the achievements of our business, and are committed to treating them fairly and with respect throughout this process."
The new restructuring program comes on heels of management's decision to cut its comprehensive care business in August. That unit was created under a restructuring program in 2008, with the goal of boosting sales, though sales were down during the first half of 2009. The unit made medical devices and tests. Its operations were spread throughout other parts of the company.