Racal Electronics is to merge its radio communications business with its defence electronics business as part of a massive shakeup that will refocus the company and shed 1,000 jobs.
Manufacturing capacity in the new defence electronics division will be reduced, affecting six UK factories and 4,000 of Racal’s total 15,000 staff. It is unclear which staff will go, but factories worldwide will be hit.
The restructuring unveiled this week will refocus the business on three principal markets: telecommunications services, data products and defence electronics. It will cost the company £13m, which it says will be recouped in 18 months.
Racal’s announcement was timed with poor financial results that saw expected profits of around £70m shrink to £40m. Two profits warnings have been issued this year.
Sales in the radio communications division fell by 13% to £140.3m, incurring a loss of £6m.
`We want to maximise the profitability of the company and the cost base has a direct impact on the profitablity of the company,’ said a Racal spokesman.
The company has appointed mergers and acquisitions advisers to consult on strategy in the telecommunications division, which managers want to see form joint ventures.