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Husqvarna slashes staff in Sweden as profits fall

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10:49 CEST+02:00
Swedish outdoor power products manufacturer Husqvarna has responded to a third quarter drop in profits by announcing the closure of factories in Sweden and the USA.

The firm also announced that it plans to increase its workforce in China.

The changes to the firm's structure will result in the loss of 200 jobs in Sweden and impact a total of 1,200 jobs within the concern worldwide.

Husqvarna plans also to consolidate its sales organisation in Europe and Asia as well as the Pacific rim area, the company explained in a statement in connection with the publication of its third quarter figures on Friday.

The workforce at Husqvarna's plants in China and Poland will be increased and thus the net job losses will come in at 400.

The programme of cuts announced by the firm include the closure of the so-called Rider factory in Huskvarna in south-central Sweden, the factory in Tansbyn near Östersund in northern Sweden, and the lawn mower facility in Höör in southern Sweden.

The firm's Spanish production will also be hit with the announcement to concentrate construction sector products manufacture in Ödeshög in south-central Sweden.

The announcement of the cuts comes as the firm, which manufactures lawn-mowers and power tools among other things, reported a drop in profits for the third quarter.

Profits after financial items amounted to 108 million kronor ($15.9 million), in comparison with a profit of 178 million kronor in the corresponding period of 2008.

"Uncertainty over future orders remains as a result of the recession and retailers are expected to retain stocks at a low level," Husqvarna writes, forecasting that deliveries are expected to decline in comparison with the corresponding period of 2008.

CEO Magnus Yngen in the firm's report described the market situation as "significantly weaker" during the third quarter in comparison with the corresponding period of 2008.

The reorganization is forecast to cost the firm around 400 million kronor to complete, of which 59 million kronor will be filed in the report for the fourth quarter 2009.

Once completed the measures are predicted to cut the firm's overheads by 400 million kronor per annum.

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