B/E Aerospace has announced that it will take a $30m after-tax charge for the third quarter which is associated with its cost deduction program.
One of the world’s largest manufacturers of aircraft cabin interior products plans to close several facilities, cut 450 jobs and consolidate certain product lines as part of its cost reduction program.
The total after-tax charges for the associated cost-cutting activities is expected to be $30 million.
The tax charges recognised by B/E Aerospace reflect costs associated with facilities consolidation, product rationalization, workforce reductions and program discontinuance – which are all factors of the company’s cost-cutting program.
The cost reduction program was implemented as a need to improve efficiencies to combat slower revenue growth expected in 2015 and 2016.
Executive Chairman of B/E Aerospace, Amin J. Khoury, said the cost-cutting initiatives were necessary if the company wanted to continue to produce positive profit margins in the face of slower revenue growth.
“These initiatives are expected to reduce costs and improve efficiencies which are necessary due to the slower revenue growth expected in 2015 and 2016,” he said.
“We expect our initiatives to offset inflationary pressures on wages, occupancy and infrastructure costs and enable us to continue to generate incremental year-over-year margin improvement.”
Mr Khoury said the company would continue its revenue growth in 2016 before a strong acceleration of growth in 2017.
“We are confirming herein that we continue to expect 2015 revenues and net earnings per diluted share to be approximately $2.8b and approximately $3.03 per share respectively, exclusive of the charges associated with the aforementioned initiatives,” he said.
“We continue to expect 2016 revenues to be one to two percent higher as compared with 2015 followed by a strong acceleration in the 2017 revenue growth rate consistent with the scheduled deliveries from the company’s record backlog.”
Head-quartered in Florida with sites around the world, including in the UK, B/E Aerospace designs, develops and manufactures a broad range of products for both commercial aircraft and business jets, including aircraft cabin seating, lighting systems and oxygen systems.