RJR Nabisco To Cut 3,900 Jobs
RJR Nabisco Inc. is cutting an additional 3,900 tobacco jobs worldwide as it adjusts to changing competitive conditions in the United States and Russia, its two biggest markets.
About 1,000 of the planned cuts disclosed Monday will come from its domestic R.J. Reynolds Tobacco business while the remaining 2,900 will be in Russia and other nations that were formerly part of the Soviet Union.
The cuts represent 15.7 percent of its global tobacco work force of 8,800 domestic and 16,000 international employees. Reynolds' cigarette brands include Winston, Camel and Salem.
In midday trading on the New York Stock Exchange, RJR shares were up 25 cents at $28.56.The domestic job cuts by the nation's second-biggest cigarette company reflect RJR's expectation that it may sell fewer cigarettes in the United States because of a 45-cent-a-pack price hike imposed after last month's mammoth legal settlement with the states.
The international cuts reflect the depressed conditions in Russia, RJR's single biggest foreign market for cigarettes, and other former Soviet nations. RJR's tobacco sales volume is approaching what it was before an economic collapse there in August, but it is selling fewer high-profit premium smokes and more of the cheaper brands.
Meanwhile, Nabisco Holdings Corp, which is 80.6 percent owned by RJR, announced it will also close more plants and eliminate jobs worldwide in a bid to be more competitive. It declined to offer specific numbers.
As a result of the moves in the tobacco and food businesses, RJR expects to charge a total of $348 million, or $1.07 a share, against earnings in the fourth quarter. It said the savings could reach $175 million a year.
The charge covers costs associated with eliminating about 1,300 domestic tobacco jobs including 315 cuts announced last month.
R.J. Reynolds and four other tobacco companies agreed last month to pay $206 billion over 25 years to settle claims by 46 states for health costs for treating sick smokers. Following that agreement, Reynolds and other cigarette maers raised prices by 45 cents a pack.
"We knew when we agreed to resolve the state tobacco litigation that the domestic tobacco company would have to make enormous sacrifices financially and operationally," said Steven F. Goldstone, RJR's chairman and chief executive.
Andrew J. Schindler, RJR's president and chief executive, said it "is imperative that RJR realign its business, given the potential for cigarette volume declines and financial payments associated with the settlement. We are taking the steps necessary to ensure that RJR is competitive in the domestic market."
The U.S. job cuts are expected to occur next year and affect various departments in the company, the statement said.
Goldstone said tobacco job cuts and unspecificed plant closings in Russia and other former Soviet Union nations should help that business "get these problems behind them, stabilize earnings and resume growth next year."
The cuts at Nabisco are expected to affect mainly overseas operations, and are the second phase of a restructuring at that business, which makes Ritz crackers and Snackwell's low-fat snack line.
Nabisco will take a $124 million pretax charge, or 35 cents a share, in the fourth quarter and spend $16 million on restructuring over the next year.
In the first phase of the restructuring, Nabsico announced in June it would take a $406 million charge and spend $118 million in restructuring.
Nabisco said the latest restructuring is expected to save the company $18 million in 1999 and $45 million a year after that.
WRitten By Skip Wollenberg