Brady Corp. announces global reorganization as loss narrows [Milwaukee Journal Sentinel]
(Milwaukee Journal Sentinel (WI) Via Acquire Media NewsEdge) Feb. 22--In a move that will eliminate 5% to 7% of its worldwide workforce, Brady Corp. Thursday announced a broad reorganization meant to cut costs and integrate the global operations of the Milwaukee-based manufacturer.
Brady announced the new measures as it released its latest quarterly earnings, which showed that Brady narrowed its losses but still fell short of Wall Street expectations. The stock closed down $1 or 2.8% to end at $34.46, recovering from a low of $31.42 at the opening of trading.
The company, with operations across Asia and Europe, did not specify how the measures would affect its workforce in metro Milwaukee.
Chief Executive Frank Jaehnert foresees a "leaner, flatter organization that is closer to the customer," shaving $25 million to $30 million in annual operating costs.
Most of those restructuring costs are severance payments. "They are talking about a 'leaner and more streamlined business,' which usually means reducing unnecessary layers of staff and management," said Mircea Dobre, a Milwaukee-based research analyst at Robert W. Baird & Co. "We'll be hearing more about this in the next six months.
Describing its restructuring, Brady said it's opting to treat the world as single market rather than act in terms of regional geographic markets, which are rendered obsolete in an age of borderless global competition. "Our reorganization around global business platforms will create better alignment of resources required to deliver increasing levels of organic sales growth," Jaehnert said.
The company specializes in myriad niche markets, supplying often anonymous parts to name-brand electronics makers, as well as industrial labels, security systems, software and identification products like the wristbands used in the health care sector and leisure and entertainment industries. In the future, it will operate under three global business platforms: Identification Solutions, Workplace Safety and Die-Cut.
Even without the restructuring, Brady has been undergoing other big changes. It recently announced the largest acquisition in its 99-year history, a $301 million deal for Precision Dynamics Corp., a California-based maker of identification products mainly for hospitals as well as concerts and sports events.
In its fiscal second quarter, which ended Jan. 31, Brady narrowed its loss to $8.68 million, or 17 cents a share, from $90.0 million, or $1.72, in the year-ago quarter.
After stripping out all the nonrecurring costs in the quarter, Brady said it posted a per-share operating profit of 38 cents, although Wall Street analysts on average expected 49 cents, Dobre said.
For the three months, total worldwide sales were up 1.1% to $324.2 million from $320.6 million. While sales rose in North America, they fell in Asia and Europe.
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