LONDON (Alliance News) - Engineering company Fenner PLC on Wednesday said it will restructure its conveyor belt manufacturing business in North America in response to the shift in the US coal industry and said its overall results are set to miss its expectations for the full year.
Fenner said its Engineered Conveyor Solutions, which has been severely bruised in recent years by the slowdown in the coal mining industry, will cut another 20% of its US workforce in the division, which would represent around 160 jobs of the 800 in total.
It said it expects the majority of this to be complete by the end of January and said the move should deliver annual costs savings of around GBP10.0 million, starting in the second half of its current financial year to the end of August 2016. It expects the cash cost of the move to be around GBP10.0 million, but said further non-cash impairment charges also will arise.
The ECS division is contending with the increased challenges faced by the US coal mining industry, in addition to a wider deterioration of sentiment in mining generally. This has resulted in Fenner focusing on initiatives to improve efficiency in the division and to cut costs.
Fenner said its Advanced Engineered Products division has continued to perform well and its outlook remains in line with the group's expectations. Orders, however, have fallen for the business due to the downturn in the oil and gas industry and pricing pressure has also increased, which Fenner has sought to offset with its cost-cutting measures.
Overall, Fenner said it remains on track to meet its expectations for the year to the end of August for the majority of the business, but said the oil and gas downturn will mean its overall results will miss its previous forecasts.
Fenner shares were down 0.2% to 127.75 pence.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.