In an effort to accommodate its expanding team in China,
Newell Rubbermaid Inc
) - the producer of Sharpie pens and Rubbermaid containers - has
recently announced the expansion of its Shanghai office. The move
reflects the company's strategy to tap the growing opportunities
in the world's most populous country. Currently, the Shanghai
office employs approximately 200 people and has the capacity to
At present, Newell's Lenox brand steel and Parker Pens are the
main growth drivers in China. However, we believe that the
Chinese economy is growing rapidly, and hence it provides growth
opportunity for all its other brands - Rubbermaid health-care,
Dymo industrial labeling products and other stationary brands
such as Sharpie, Expo and Papermate.
In October, Newell announced its intention to reduce the
workforce by 10% and also take other steps to lower the cost
structure. Therefore, this decision to expand in China suggests a
transfer part of its operations to lower-cost regions.
The announcement was made concurrent with its third quarter
results reported on Oct 26, 2012, Newell has announced the
expansion of its Project Renewal Restructuring Program. The
company has outlined five new work streams in connection with the
- In order to simplify its organizational structure, the
company has decided to report its financial results under six
new segments beginning in the fourth quarter of 2012. The
company has eliminated its Consumer and Professional segments,
while retaining Baby & Parenting. The six new reporting
segments are - Tools, Commercial Products, Writing, Home
Solutions, Baby & Parenting, and Specialty.
- To reduce costs, Newell will widen its scope of SAP.
- To simplify decision making, transaction process and
information management, the company, along with aligning other
resources, will apply SAP.
- Newell will enhance its efficiencies in customer services
and sourcing functions.
- The company will optimize manufacturing and distribution
With the completion of the program, Newell expects to save
additional $180-$225 million annually from the end of the second
quarter of fiscal 2015.
We believe that the Project Renewal initiative will help the
company to reduce the complexity of the organization while
increasing investments in most important growth areas within its
Currently, the company, which competes with
Tupperware Brands Corporation
), holds a Zacks #2 Rank, implying a short-term Hold Rating on
the stock. An impressive record of beating the quarterly earnings
expectations, margin improvement, a positive fiscal 2012 outlook,
and a decent dividend yield, are the major growth drivers for the
shares of this company.
Newell Rubbermaid is one of the leading manufacturers of home
and office products in the U.S. The company also possesses a
strong portfolio of widely popular brands such as Sharpie, Paper
Mate, Dymo, Expo, Waterman, Parker, Irwin, Lenox, Rubbermaid,
Levolor, Graco, Calphalon and Goody. Leveraging its strong brand
equity, Newell Rubbermaid expects modest earnings going ahead,
provided the market scenario improves.
NEWELL RUBBERMD (NWL): Free Stock Analysis
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