Avon's European job cuts start filtering through

By Simon Pitman

- Last updated on GMT

Related tags Europe United kingdom Avon Uk

Avon's ongoing restructuring program has led to the loss of 184
jobs in Northamptonshire, UK, as the company continues to trim its
operations worldwide to increase profitability.

First announced in 2005, the restructuring has led to the loss of an estimated 15 percent of the 48,000 workforce, with the current round of restructuring expected to see a further 2,400 job cuts in the course of the next year. The UK jobs are to be axed at the company's main UK offices in Northampton and plant in nearby Corby, and will largely be attributable to the relocation of call centre jobs to India, a report in local newspaper Northampton Chronicle said. The jobs are expected to be phased out in the course of the next two years, with the first round of redundancies taking place in the Autumn and the final round taking place in Spring 2010. Avon currently employs around 1,800 people in the UK and has been based in Northampton for 30 years. Jobs shift to India and Eastern Europe​ The operation currently consists of the call centre together with a processing and distribution facility. Manufacturing was shifted to Eastern Europe several years ago - a move that reflects the growing importance of the consumer market there and the fact that labour costs are lower. The company now expects to make annual savings of $430m once the performance boosting initiatives have been fully implemented in 2011-2012. However, the cost of the restructuring, which is mostly attributable to restructuring the workforce, has risen significantly, pushing total costs up from an initial estimate of $500m to $530m - a figure that has impacted the bottom line. Restructuring hits profits​ Although Avon reported strong sales growth in 2007, its recently released quarterly financial results revealed that costs related to restructuring had held back profits. Net profit came in at $128.9m, compared to $184.1m for the same period a year earlier, a figure that was negatively impacted by significant restructuring costs. The company said that restructuring expenses related to simplifying its product line had contributed to higher than expected costs during the quarter, but likewise the results were still less than financial experts had expected. However, developments in the fourth quarter sales were extremely positive, with revenues growing 17 per cent to reach $3.05bn, boosted by the fact that all six operating regions contributed to the growth.

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