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P&G appoints new CEO
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September 9, 1998: 12:32 p.m. ET
Consumer-products maker also details restructuring, warns of 1Q earnings
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NEW YORK (CNNfn) - One week after announcing a massive restructuring plan, household-products titan Procter & Gamble Co. said Wednesday it named Durk Jager to lead the company into the new millennium.
The company also warned that it expects fiscal first-quarter earnings to fall short of its expectations.
The news sent Procter & Gamble shares tumbling 4-3/4 to 74-7/8 in midday trading.
Jager, currently president and chief operating officer, will replace John Pepper as chief executive officer on Jan. 1. He also will take over Pepper's seat as chairman of the board next September, when the reorganization is complete.
P&G also spelled out details of its reorganization plan Wednesday.
P&G said it will move from four business units based on geographic regions to seven global business units based on product lines. It also will create eight market development organization regions to localize marketing efforts.
The Dow component and maker of Pampers diapers and Folgers coffee also plans to establish a single global organization to provide accounting, employee benefits and payroll, order management, and information and technology services to the rest of the company.
Finally, the company will reassign staff roles under the new business organizations and overhaul its reward systems and training programs to boost productivity.
"Taken together, these changes position us for the most productive period of growth in our 161-year history," Pepper said.
Pepper said it would probably take five years for the new structure to be put in place.
Last Wednesday, Cincinnati-based P&G unveiled broadly defined plans to boost sales and expand its product lines.
The company said Wednesday the restructuring will lead to an earnings charge, but declined to give specifics.
P&G previously established a goal to double its sales within 10 years.
But those tracking the company say P&G will be unable to meet that goal with the current rate of growth.
P&G posted sales of $37.2 billion for fiscal 1998, ended June 30, a 4-percent increase over the previous year.
Earnings off
After announcing the management shift and detailing the company's restructuring, P&G's financial chief told analysts the company expects first-quarter earnings to fall short of expectations, but it plans to meet analyst estimates for the year.
"First-quarter earnings growth will be in the mid-single digits compared with the upper single digits that we expected," said Clayton Daley, P&G chief financial officer. "But for 1998/99, we will not change our guidance. We will make up for the first quarter… later in the year."
Daley said sales growth for the quarter will be about 1 percent to 2 percent, with price increases offsetting the impact of low foreign exchange rates.
P&G has had to halt some shipments in Russia because of foreign-exchange problems. Daley did not specify the full impact Russia would have on results. He said volume in North America was equal to a year ago and volume in Asia was "as expected."
First Calls' most recent report forecast a first-quarter profit of 79 cents a share and $2.84 a share for the full fiscal year ending June 30, 1999. 
-- from staff and wire reports
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Procter & Gamble
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