Cable maker BICC axed 500 jobs last week, blaming a slump in optical fibre prices and the general economic slowdown for the closure of factories in Wales and Australia.
Shares in the company fell by a quarter after chief executive Alan Jones warned that second-half profits would be ‘significantly’ below the £46m made in the first half.
He said the company would also incur a £25m exceptional charge in the second half of the year to pay for the factory closures.
About 200 of the job losses will be at BICC’s Deeside plant in North Wales, with 250 in Australia, and the remaining 50 elsewhere in Europe. The company has plants in Germany and Spain, as well as Britain.
Jones added: ‘We believe that it is important to act swiftly when problems appear, and this is what we have done and are doing.’
The redundancies, which were announced last week, follow 2,000 cuts earlier this year as part of a shake-up of BICC’s European operation. The latest round means that the UK workforce has fallen by more than 1,000 this year.
Jones ruled out the sale of any of the group’s optical fibre operations. ‘The cable business as a whole is coming through. But it’s the optical fibre business that was hit by an over 30% drop in prices compared with a year ago. The decline in prices has been accelerating since March.’
Sales volumes were also flat against last year, reflecting the economic slowdown in Asia and Russia, he said.
Analysts slashed earnings forecasts for 1998 from £93m to £67.5m. One said the long- awaited turnaround could take two to three years to achieve and criticised the company for its apparent lack of strategic planning.
‘BICC is in desperate need to turn around the cable business. Mere cost cutting has not been sufficient in the past. Why should it work now?’ one analyst argued.