Engineering firm gearing for major ‘cost reductions’
By Andrew Merrell | 5th November 2019
What it means for its major operations in Gloucestershire are yet to be made clear, but one of the world's biggest engineering firms has warned of significant 'cost reductions'.
The business, a world-leader in technology used in the current and next generation of petrol, diesel and electric vehicles, said it needed to "act with increased urgency" to battle "ongoing industry and transitional headwinds".
Its headline statement - a restructuring plan targeting more than $150 million (US) in pre-tax cost savings in 2022 - does also come with a commitment to "investing to support our longer-term growth".
American-owned Delphi Technologies employs and estimated 1,000 staff at its Stonehouse plant.
"Consistent with our first half performance, our Q3 results were impacted by ongoing industry and macro headwinds," said Richard F. Dauch, chief executive officer of Delphi Technologies.
"While we continue to make solid progress in a number of key operational and commercial areas, we must act with increased urgency to improve our financial performance.
"Today we have announced a fundamental transformation plan, which is a direct response to the major transitions and challenges our industry faces, consistent with our priority to realign and reshape Delphi Technologies for future profitable growth.
"This important and necessary step is expected to reduce our annualized costs by more than $150 million over the next three years, while significantly improving our free cash flow and return on invested capital.
"As a pioneer in propulsion technologies, we remain focused on investing to support our longer-term growth, executing on our strong business wins, and delivering on our vision to make vehicles drive cleaner, better and further."
The detail, such as we have it from the company, will see it "take a range of actions to reshape and realign its engineering footprint, as well as significantly reducing its overall cost structure, to accelerate its longer-term profitable growth".
"In total, these actions are expected to result in restructuring costs of approximately $200 million through the end of 2022. The corresponding gross cost savings are expected to amount to more than $150 million in 2022, with approximately $50 million targeted in 2020.
"In addition, the Company expects the cost reduction plan to significantly improve its cash flow performance. Net of the restructuring costs referenced above, the company expects the plan to deliver an approximately $300 million cash benefit through the end of 2023."
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