UPDATE: Assa Abloy To Close 15 Units, Cut 1,800 Jobs
Assa Abloy AB (ASSA-B.SK), the world's largest lock maker by
sales, Thursday became the latest Swedish company to make a swathe
of job cuts in response to the economic downturn, announcing a new
sweeping 1.18 billion Swedish kronor ($141.8 million) restructuring
program that includes shutting down 15 productions units and laying
off 1,800 employees.
Assa Abloy's move follows moves to cut more than 14,000 jobs at
truck maker Volvo AB (VOLV-B.SK), 1,200 layoffs at telecoms company
TeliaSonera AB (TLSN.SK), 1,000 at engineer Alfa Laval AB
(ALFA.SK), 3,000 at consumer goods maker Electrolux AB (ELUX-B.SK)
and 1,000 at auto parts maker Autoliv Inc. (ALV), among others.
In November, the last jobless data available, Swedish
unemployment jumped to 6.2% from 5.7% in October - a bigger rise
than economists had expected. Unemployment is expected to continue
Assa Abloy said it will consolidate administrative support
functions and move to final assembly work in the remaining 25 units
in high-cost countries.
The restructuring plan is on top of measures already announced
and involves an extra 600 job cuts than previously announced.
Together with a cost-cutting plan unveiled a couple of years ago,
Assa Abloy is cutting about 3,800 jobs. It had 33,051 employees at
the end of September.
The cost has risen from a previous estimate of SEK800 million.
The company already has booked SEK247 million against earnings in
the third quarter.
It expects to recoup the costs in two to three years, and said
all its divisions will be affected.
Assa Abloy is now expected to book SEK933 million in one-off
expenses for the restructuring program for the fourth quarter.
In addition, the company said its fourth-quarter earnings will
be hit by SEK80 million in one-time charges relating to the
provision of supplementary lock protection in its Swedish
In the third quarter, when it also faced restructuring costs, it
generated a net profit of SEK709 million, down from SEK884 million
a year before.
Chief Executive Johan Molin told Dow Jones Newswires that he
expects Assa Abloy to report a net profit in the fourth quarter
despite the new charges.
ABG Sundal Collier analyst Christer Fredriksson said the
company's move appears to be a natural development in these tough
economic times. The higher restructuring costs the company is now
facing will be balanced long term by bigger savings, he said,
adding, "the total effect should be pretty neutral."
ABG Sundal Collier rates the shares sell with a target price of
At 1055 GMT, the shares traded down SEK0.75, or 0.9%, at
SEK80.25, while the benchmark OMX index of the 40 biggest companies
traded up 0.5%. Over the past 12 months, Assa Abloy's shares have
fallen 29% compared with a 49% drop for the OMXN40.
Company Web site: www.assaabloy.com
-By Anna Molin and Ola Kinnander; Dow Jones Newswires; +46 8 545 130 91; firstname.lastname@example.org
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