Textron to cut 2,200 jobs
23 Dec 2008
Textron, the largest manufacture of corporate jets and the maker of Bell helicopters and Cessna aircraft, said it would exit all finance businesses except those that directly serve its manufacturing units. The company also is reducing its workforce by 2,200 jobs.
Textron, which employs 44,000 workers worldwide, did not rule out "further headcount reductions" and other cost-saving measures.
Textron Inc is a $12.6 billion multi-industry company operating in 28 countries with approximately 42,000 employees. The company leverages its global network of aircraft, defence and intelligence, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell Helicopter, Cessna Aircraft Company, Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee, Textron Systems and Textron Financial Corporation.
Finance is by far the smallest of Textron's five businesses, making up only about 5 percent of the company's revenue this year, corporate figures show.
Going forward, Textron Financial will limit itself to financing customer purchases of Textron products, such as helicopters, also known as its ''captive financial business,'' the company said.
The company also plans to increase Textron Financial's reserves to $130 million ''as a result of continued market stress and the impact of the exit plan.''
The company also has extended the revolving period for its $550 million aircraft finance securitisation facility through December 2009.
Nearly $20 million of the restructuring costs are non-cash, relating primarily to asset impairment charges for facilities to be closed.
As a result of the cost cutting exercise, Textron now expects fourth quarter net loss to be in the range of $0.91 to $0.81 per share. Excluding items, the company expects fourth quarter 2008 adjusted earnings from continuing operations will be between $0.30 and $0.40 per share, compared to its previous estimate of $0.80 to $0.90.
Previously, Textron had said that it would exit its asset based lending and structured capital segments, as well as some other business lines, totalling $2 billion in managed receivables. The new plan brings the total to $7.9 billion of the $11.4 billion that is in the firm's managed receivable portfolio.
"Executing this new strategic direction for TFC is expected to significantly enhance our long-term liquidity position in light of continuing disruption and instability in the capital markets," Textron chairman, president and CEO Lewis Campbell said in a statement.
Shares of Textron fell 4.8per cent to $14.60 in after-hours activity.
