Gardner Denver has announced a restructuring initiative to optimize its global manufacturing footprint, reduce costs and expand margins. These initiatives, which focus primarily on its European Industrial Products Group, will consolidate manufacturing facilities and reduce associated staffing levels to increase operational efficiency and provide additional resources to invest in profitable growth. In connection with today's announcement, the Company also confirmed its prior earnings guidance for full-year 2012.
Gardner Denver expects to begin implementing its restructuring plan over the next several months and intends to conclude these initiatives by the end of 2015.
In total, these initiatives are expected to generate annualized, pre-tax cost savings of $35-$40 million by 2016, with $10-$15 million expected to be achieved in 2013.
"Gardner Denver has a solid track record of margin expansion and execution supported by the principles of the Gardner Denver Way," said Michael M. Larsen, Gardner Denver Interim Chief Executive Officer and Chief Financial Officer. "Today, we are announcing a series of strategic actions and plans designed to ensure that our company remains financially well-positioned and appropriately structured for profitable, long-term growth in our Industrial Products Group in Europe."
"After extensive analysis and consideration, we believe these restructuring initiatives will enhance the Company's prospects for growth and value creation, while ensuring that our businesses continue to meet and exceed the needs of customers every day. We further recognize that this will have a personal impact on people who have been dedicated to the mission of Gardner Denver. We recognize their contributions to the achievements of our business, and are committed to treating them fairly and with respect throughout this process," said Larsen.
The company noted that it expects to record cumulative, pre-tax restructuring charges related to the restructuring plan, consisting primarily of severance benefits and other integration costs, in the range of $85-$100 million which will be fully realized by 2015, with $35-$45 million expected to be incurred in 2013.