Ionics restructures

Related tags Company Revenue

Ionics has announced a total restructuring of its global business
operations following an initial announcement made at the beginning
of last month.

Ionics has announced a total restructuring of its global business operations following an initial announcement made at the beginning of last month.

The company says that the objective of its business strategy is to increase the percentage of revenues that are recurring, in areas such as plant operations and the sale of consumables such as membranes. The restructuring programme is intended to improve financial performance through a realignment of the company's management structure, a reduction in personnel, and the consolidation of certain operations. Overall, the company says its goal is to achieve a 10 per cent EBIT margin and a 10 per cent net income return on equity.

The restructuring will also consolidate the company's sales, engineering, manufacturing and accounting functions, which are currently spread among numerous reporting entities, into three regional centres in the United States, Europe and Asia. The company's existing Equipment Business Group (EBG) and Ultrapure Water Group (UWG) will be consolidated into a single business group. Certain subsidiaries will be consolidated and administrative services, manufacturing and purchasing activities will be centralised. Current plans include divesting the Elite Consumer Products division, terminating activities at the Company's Ionics Watertec facility in Australia, and terminating its European Home Water point-of-entry (POE) activities.

Concurrently, the company has undertaken to update its reporting processes to be consistent with its new organisation structure. This activity includes the implementation of a new Oracle operating system which the company says will be fully integrated across all its operations, first in the US in 2004 and internationally early in 2005.

As previously announced, approximately 200 positions are being eliminated in connection with the restructuring. The company believes that this action will result in annual personnel savings of approximately $14 million (€12m) and annual facilities savings of approximately $1.4 million.

The company estimates that restructuring and other costs will include severance costs of approximately $4.5 million, facilities shutdown and relocation costs of approximately $3 million, and reporting process improvement costs of approximately $3.5 million.

In total, the company estimates that the restructuring and other charges will be approximately $18 million, excluding any goodwill impairment charges.

The company also announced its 2004 financial forecast, which estimates revenue for the year at $350 million, gross margin at 30 per cent and an EBIT margin of 5 per cent.

Ionics​ is a global separations technology company involved in the manufacture and sale of membranes, equipment, systems and services for the purification, disinfection, concentration and analysis of water, wastewater and ultrapure water.

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