USA: Delphi announces major restructuring
The plan includes exiting approximately $900 million of the company's businesses previously said to be under portfolio review. Delphi plans to take a charge against first quarter 2001 earnings of $400 million after taxes.
"This restructuring is necessary to strengthen Delphi both in the uncertain near-term environment and to compete and prosper for the long-term,'' said J.T. Battenberg III, Delphi chairman, CEO and president. He added that the moves were "consistent" with Delphi's "track record of responding quickly to industry changes".
The workforce reduction of approximately 11,500 positions equates to 5% of the company's workforce and breaks down as follows: 5,600 or 10 percent of US hourly employees; 2,000 or 11 percent of US salaried employees; 3,900 employees in non-US locations.
Plants planned for 'consolidation, closure, sale, or negotiations process' are:
- Ande, France
- Fort Defiance, Arizona, USA
- Betim, Minas Gerais, Brazil
- Piracicaba, Brazil
- Bochum, Germany
- Robertsdale, Alabama, USA
- Casoli, Italy
- Saginaw, Michigan, USA, Plant #2
- Southampton, UK
Delphi previously announced plans to review businesses representing sales of $4 billion to $5 billion for portfolio actions in the 2001 calendar year, including potential closure, sale, partnership or other resolution.
"These actions address approximately $900 million of the previously announced business lines under portfolio review. The restructuring also favourably impacts future earnings performance for an additional $700 million of ongoing business lines,'' said Alan S. Dawes, Delphi executive vice president and chief financial officer.
Reflecting weaker than expected vehicle manufacturer orders, lower mix content per vehicle and soft U.S. aftermarket sales, Dawes said the company expects Q1 2001 revenues to be in the $6.4 billion to $6.5 billion range or about $100 million to $150 million below the levels expected in January 2001. This estimate is 18 percent below Q1 2000 revenues of $7.8 billion.
Keith Hayes, equities analyst at Goldman Sachs commented: "This is not unexpected given the slowdown in the North American marketplace and it confirms that a quick bounce-back is unlikely."
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