Avon restructuring update
This article was originally published in The Rose Sheet
Executive Summary
Avon will incur a $90 mil. charge in the second quarter of 2009 related to restructuring activities, firm announces July 22. About $77 mil. is attributed to costs to implement realignments of supply-chain manufacturing operations in North America, Western Europe and Central and Eastern Europe, while $13 mil. relates to changes out of Avon's 2005 restructuring program. Effort will result in the elimination of approximately 1,200 positions when the initiatives are fully implemented by 2012-2013. In North America, the restructuring will involve closing Avon's Springdale, Ohio facility by 2012 to shift manufacturing to Morton Grove, Ill., Celaya, Mexico and contract manufacturers. Avon will also streamline operations in Russia, Latin America and Western Europe. Once implemented, the initiatives will reflect nearly half the costs required to put Avon's 2009 restructuring program into place. "We are on track to achieve our stated goal of approximately $200 mil. in total annualized savings by 2012-2013, with costs to implement all initiatives expected to be in the range of $300-$400 mil.," says Charles Cramb, Avon's vice chairman, chief finance and strategy officer. Firm announced new targets in its ongoing restructuring initiative in February (1"The Rose Sheet" Feb. 23, 2009, In Brief)
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