CHICAGO (AP) -- Sharpie pen maker Newell Rubbermaid Inc. said Tuesday it would stop making some products while raising prices on others as much as 22 percent as it continues to grapple with rising energy costs that make plastic more expensive.
The Atlanta-based company's iconic Rubbermaid line of storage and organization gear will be the brand most affected by the cuts, although few details were announced. Newell Rubbermaid said it would divest, downsize or leave categories accounting for up to $500 million in sales.
"Put simply, the forecast for dramatically higher ongoing energy costs means that the world has changed, and we must change with it in order to maintain a healthy portfolio," Chief Executive Mark Ketchum said in a statement.
Particularly vexing to the company, which also lowered its full-year earnings guidance on Tuesday, are increasing oil and natural gas prices -- important components of resin, a key ingredient in many of the company's plastic products.
"In categories where resin is a high percentage of cost of goods sold and the consumer's willingness to pay for innovation is low, the economics are no longer viable," Ketchum said.
Newell Rubbermaid has seen its shares tumble nearly 40 percent this year -- and reach an all-time low on Tuesday -- as it struggles to control rising expenses for fuel and raw materials along with a weak U.S. dollar.
During an earnings call this spring, executives proclaimed Newell Rubbermaid's new development mantra as "fewer, bigger, better" as it warned of challenges controlling escalating costs.
Further fueling the company's trouble is the weakened U.S. dollar, which has fallen against the Chinese yuan. With more than 75 percent of Newell Rubbermaid's source products coming from China, materials from the country cost more.
The company's products include the Rubbermaid and Sharpie brands along with Calphalon cookware and cutlery and office fixtures such as Rolodex organizers and Parker pens.
Newell Rubbermaid said it expected full year normalized earnings to be between $1.40 and $1.60 per share. That's down from the already lowered projection of $1.80 to $1.90 issued in April and below Wall Street forecasts.
Analysts surveyed by Thomson Financial predicted the company would post full-year earnings of $1.76 per share.
Newell Rubbermaid said it expects its cost-cutting efforts to save between $175 million and $200 million when they are fully implemented by 2010. It also plans to adjust prices for resin products each quarter beginning in January.
The company is scheduled to release second-quarter results July 31.
Newell Rubbermaid shares fell 35 cents, or 2.3 percent, to $15.09 in morning trading after reaching an all-time low of $15.01.
