Peter Dejong/AP Unilever announced Tuesday it will lay off 25,000 employees, or about 10 percent of its global workforce.

The company, known for a wide array of household products including Lipton teas, Calvin Klein fragrances, Dove soap, Close-Up toothpaste and Breyer's ice cream, made the announcement as it released year-end 1999 earnings that showed a 5 percent drop in net profit, from $3.28 billion in 1998, to $2.97 billion last year.

In a bold attempt to shake off perceptions of inaction in the face of difficulty, Unilever set ambitious new targets to increase revenue growth to five percent and operating margins to 15 percent by 2004, versus 11.1 percent in 1999.

To achieve such results, the company said layoffs will be made over the next five years, mainly in Europe and the Americas, as it closes 100 of its 250 production sites in a move to regroup its manufacturing operations into regional networks.

Late last year, Unilever disclosed that it would focus on 400 of its current 1,800 brands. Today, it said it will invest $1.5 billion to market that smaller product lineup over the next five years.

"The consequence of that is that the tail brands will fall away in due course and that we will be able to simplify and make major improvements to the supply chain and to the way in which we do business generally," Chairman Niall Fitzgerald said in an interview with Reuters.

Antony Burgmans, chairman of Unilever's Dutch arm, said in a statement he expects net earnings per share to grow between 8 percent and 10 percent, before exceptional items, in 2000. He said improved conditions in emerging markets, Western Europe and North America will be the driving force behind the growth.

In the past year, Unilever posted an increase in operating profits and margins in all regions but Latin America, where "difficult economic conditions" and tougher competition in the laundry market hurt results, Burgmans said. Unilever is one of the world's largest manufacturers of laundry detergent.

Russia and Central and Eastern Europe also have been trouble spots, Fitzgerald said. "It's still a bit depressed there," he said. "We have consolidated our business. We see it as having significant potential for the future, but for the moment it's tough going but we're sticking with it."

The company also said it will also invest $200 million this year to expand its Internet business activities, and plans to start a Web site over the next two years where consumers can buy the company's products. It said more investment in e-business could be expected beyond the year 2000.

Burgmans said Unilever would "continue to look aggressively for value-adding acquisitions and alliances that will further consolidate and reshape our industries."

Unilever's hard-nosed approach pleased markets, which drove up its stock price in morning trading. The shares were ahead 4.7 percent in London and 6.2 percent in Amsterdam, as investment bank Warburg Dillon Read raised its recommendation on the stock to "strong buy" from "hold."

"They see an operating margin of 15 percent by 2004, that's good. And five percent top-line growth in 2004, that's also rather strong," said industry analyst Anneke Groen of Rabo Securities in the Netherlands.

But Unilever's share price gains were off rock-bottom lows. In a year-old bear market for consumer products stocks, the stock has slid more than 30 percent over the past 12 months and underperformed the broader European market by about 50 percent.

— Reuters and the Associated Press contributed to this report