posted September 17, 2003 09:17 AM
CHICAGO, Sept 17 (Reuters) - Cigarette company R.J. Reynolds Tobacco Holdings Inc. (RJR) on Wednesday said it would reduce its work force by 40 percent to cut costs as it combats competition from low-cost brands.R.J. Reynolds said it would take a $340 million charge in the third quarter for the move, which will eliminate about 2,600 jobs.
It will also focus its marketing efforts on just two of its four main brands to get the best return on its investment, the Winston-Salem, North Carolina, company said in a statement.
The job cuts are part of a plan R.J. Reynolds hopes will cut $1 billion in costs by the end of 2005. It has already begun implementing $800 million worth of cuts, including the job reduction. It expects to see $300 million in savings in 2003.
Like top competitor Philip Morris USA, the unit of Altria Group Inc. (MO) , R.J. Reynolds has seen its business hit by lower cost, generic cigarettes. To counter this, R.J. Reynolds said it will focus its marketing on premium brands Camel and Salem, while making more limited investments in two other brands, Winston and Doral.
R.J. Reynolds said it now expects earnings per share of about 60 cents to 95 cents for the year and operating income of $170 million to $220 million.
It also expects its U.S. tobacco shipments to fall about 12 percent.
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