Johnson & Johnson, hailed as the 6th most profitable company in the United States, is also about to begin a large-scale cost reduction and adjustment! Early yesterday morning, Johnson & Johnson officially announced its global restructuring plan, estimating that between 7,000 to 8,200 employees will be laid off, with an annual reduction in personnel expenses of $1.4 billion to $1.7 billion.
"Johnson & Johnson China has not yet been authorized to evaluate this restructuring." As of press time, this reporter had still not received a detailed response from Johnson & Johnson's U.S. headquarters regarding the restructuring in the China region, Changsha Recruitment Network.
Global workforce reduction of 6%-7%
Johnson & Johnson has always been considered a miracle. Last year, despite the U.S. economy experiencing a continuous 12-month decline, its sales increased by 4.3%, and its ranking among the Fortune 500 rose six places to 29th. While profits for the Fortune 500 companies plummeted by 85% last year, Johnson & Johnson's profits increased by 22%.
This company formally announced its global restructuring yesterday, aiming to achieve cost compression through management flattening, expanding individual control scope, and streamlining business structures and procedures. Johnson & Johnson stated that the expected layoff would be between 6% to 7% of its global workforce, which translates to approximately 7,000-8,200 people based on its current employee count.
"By the end of the fourth quarter of 2009, pre-tax related restructuring costs are estimated to reach between $1.1 billion to $1.3 billion, which will be counted as extraordinary project costs," Johnson & Johnson said. Excluding restructuring costs and other non-recurring items, the full-year earnings forecast for this year is expected to be between $45.4 and $45.9 per share.
Diversified operations face challenges
"Johnson & Johnson's sales may decline this year, a situation that hasn't occurred since 1976. If its profits also fall, it would be the first time in 25 years," industry expert Hong Ning told our newspaper. This diversified company has actually performed quite well but has acted rather low-key, thus never receiving sufficient attention. "To quote Citigroup analysts, 2009 will be Johnson & Johnson's most challenging year in a decade."
Upon reviewing Johnson & Johnson's latest financial report, I found that although its net profit increased by 1.1% to $3.35 billion in the third quarter, its revenue fell by 5.3% to $15.1 billion. Due to competition from generic drugs, drug sales plummeted by 14%, with a sharp 19% drop in the U.S. market. Drugs such as Risperdal, exclusively produced by Johnson & Johnson for psychiatric disorders, and Topamax for epilepsy treatment and migraine prevention lost their patent protection last year, prompting Johnson & Johnson to announce in April this year that it would cut 900 positions due to this impact.
Johnson & Johnson has always pursued diversified operations, even during economic downturns, enabling it to save costs across hundreds of branches."
[Author: Fan Di, Source: Southern Metropolitan Newspaper]
(Responsible Editor: Wang Jianyu)
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