Sulzer Cutting 300 Jobs as Stahlmann Reorganizes UnitsPatrick Winters
Sulzer AG said it’s eliminating 300 jobs as the Swiss manufacturer reorganizes to make up for declining European demand at its waste-water pump business. The stock dropped to a 13 1/2-month low.
About half the cuts have already been implemented, and about 100 positions are scheduled to go at Sulzer’s headquarters in Winterthur, the company said in a statement today. “Recurring benefits” of about 25 million francs ($28 million) are forecast starting in 2014, following charges of about that amount this year because of the reorganization, including the workforce reduction.
Profitability in 2013 is forecast at 9 percent of sales, excluding one-time items, compared to 10.2 percent in 2012, Chief Executive Officer Klaus Stahlmann said on a conference call. Sulzer had forecast a “slightly lower” full-year margin.
The economy of the euro area nations that neighbor Switzerland returned to growth in the second quarter following an 18-month recession. Sulzer said today that demand at its pump business was “very strong” in the Asia-Pacific region, versus a “comparably weak” market in Europe.
“All the measures we are taking should take us back to the profitability of previous years,” Stahlmann said. “In the first three months, we had under-utilization of capacities, which are very difficult to undo over the next nine months.”
Sulzer dropped as much as 6.3 percent to 129.60 francs, the lowest intraday price since Sept. 3, 2012, and was trading down 5.4 percent at 11:11 a.m. in Zurich. The stock has dropped 9.2 percent this year, valuing the company at 4.5 billion francs.
The company’s global workforce totaled more than 17,900 employees at the end of 2012, according to data compiled by Bloomberg. The main reason for the job cuts is the performance of the Cardo Flow Solutions waste-water pump business, which was acquired in 2011, Stahlmann said today. Sulzer paid $935 million to Assa Abloy AB for the business in a deal brokered by former CEO Ton Buechner.
Nine-month new orders rose 1.8 percent to 3 billion francs, Sulzer said. The manufacturer reiterated a forecast for slight growth in full-year order intake. Sales will be at about the same level as last year, Sulzer said, scaling back from an earlier forecast of a slight increase.