Elyria, Ohio
After posting a 28 percent drop in second-quarter profit, Invacare Corp. announced plans last month to cut 230 jobs and close four facilities as part of a cost-reduction plan aimed at improving earnings.
The company began its first round of layoffs last month.
While net sales for the second quarter, ended June 30, increased 17 percent to $396.3 million, the DME manufacturing giant reported net earnings of $12.9 million versus $18 million for the same period last year, blaming increased freight costs and continued reimbursement pressures in the North American market.
To improve earnings, the company announced additional cost-cutting measures, including outsourcing improvements utilizing its China manufacturing capability and third parties; shifting substantial resources from product development to manufacturing cost reduction activities and product rationalization; reducing freight exposure through freight auctions and changing the freight policy; and general expense reductions. The measures are expected to total $9 million in 2005's second half and should result in annualized savings of $20 million.
The company also said it has begun review of its global manufacturing and distribution strategy and is evaluating a multi-year plan “to exit a number of manufacturing and distribution locations” that would yield annualized savings of up to $21 million.
“With the cost reduction actions … along with the benefits from Chinese manufacturing and further penetration of the ambulatory oxygen market with sales of the HomeFill oxygen system, Invacare is committed to returning to positive earnings growth in the fourth quarter. With the facility closures over the next few years, Invacare is further committed to additional actions to make sure its cost base can support solid earnings growth into 2006 and beyond,” said company Chairman and CEO Mal Mixon.
Invacare employs 6,250 and sells products in 80 countries.
