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Newell rejigs structure, will cut 500 jobs

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Newell Rubbermaid Inc. (NWL-N) said it would cut 500 jobs as the maker of Rubbermaid containers and Sharpie pens simplifies its corporate structure to focus on businesses and overseas markets with the most growth potential.

The company also reported a higher-than-expected third-quarter profit on Friday and affirmed its full-year outlook.

Newell will consolidate two manufacturing plants and two distribution centers and go from having three operating groups to two, one for consumers, the other for the professional market.

The company had 19,400 employees as of December.

The simpler structure will help Newell "realign resources to our highest potential businesses," Chief Executive Officer Michael Polk said in a statement.

Newell hired Polk, a former Unilever executive, last summer, looking to tap his marketing and branding experience to boost its own brands globally.

The company says it will use savings from the reorganization on marketing and to develop its business in emerging markets like Latin America and Asia. For instance, Latin American sales only made up a small fraction of overall business, but rose 18.4 percent in the third quarter.

The reorganization will also reduce the number of Newell's global business units to nine from 13.

The moves will take effect Jan. 1 and lead to charges of $90 million US to $100 million by the end of 2012.

Net sales in the third quarter rose 5.8 percent to $1.55 billion, helped in part by favorable currency changes.

Newell suffered from rising product costs that it could not offset with higher prices. Gross margin fell 1 percentage point to 37.4 percent.

Still, the company, whose other products include Graco strollers, Calphalon cookware and Paper Mate pens, has benefited from a move away from commoditized, lower-margin product categories like shelving and wooden pencils.

Newell reported a net loss of $177.6 million, or 61 cents per share, for the third quarter, compared with a year-earlier net profit of $28.3 million, or 9 cents a share.

Excluding one-time items, earnings came 45 cents per share, beating Wall Street forecasts of 43 cents.

Newell still expects to earn $1.55 to $1.62 per share this year, excluding one-time items, while Wall Street analysts were expecting $1.55, according to Thomson Reuters I/B/E/S.

The company also still sees sales up 1 percent to 3 percent for 2011, net of any currency effect.

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