Tomkins has announced that a further 1,600 jobs will be cut after it reported a loss after tax of £118.1m for the first half of the year.
The London-based engineering company said that difficult trading conditions in 2009 had led to a significant decline in its end markets. Sales were down to $2bn (£1.2bn) compared to $2.9bn a year earlier.
According to the group, the decline in sales was partially offset by pricing actions taken towards the end of 2008. Despite this, however, operating cash flow fell from $90.4m in 2008 to $14.6m and the interim dividend dropped to 3.5 cents from 11.02 cents a year earlier.
As a result, the company has undertaken a sweeping restructuring programme, which will include the loss of 1,600 jobs in addition to the 3,900 cuts made in the first half of the year. So far this year, 28 plant closures have been announced, 15 of which are within the Industrial and Automotive division. The group estimates that these cost-reduction initiatives will lead to savings of $150m per year by the end of 2011.
James Nicol, Tomkins’ chief executive, said: ‘Under these continuing difficult economic conditions, the group’s focus remains clear: continuing positive cash flow generation, maintaining our momentum in restructuring the business, preserving a strong balance sheet and identifying further opportunities for growth, particularly in green products and service-related businesses.’
The company recently acquired Middle Eastern fluid engineering group Hydrolink. According to Nicol, the acquisition supports Tomkins’ strategy of expanding its Gates Engineering and Services business to generate further growth in the year ahead.
The group said that market conditions for the remainder of 2009 remain unclear, although it expects some modest improvements in the second half from a slowdown in the rate of decline in some of its end markets.