PERLOS CORPORATION STOCK EXCHANGE RELEASE MARCH 5, 2007
PERLOS' PROFITABILITY IMPROVEMENT PROGRAMME PROCEEDS: THE COMPANY WILL
DISCONTINUE PRODUCTION OPERATIONS IN FINLAND AND STREAMLINE GROUP ORGANISATION
The profitability improvement programme initiated by Perlos in January has
reached a significant milestone today with the conclusion of the
co-determination negotiations started on 22 January 2007 concerning all
personnel in Finland. In the negotiations, Perlos has sought various options for
improving the profitability of its Finnish operations in the current
over-capacity situation. The negotiations have concerned 1,400 persons.
Following the completion of the negotiations, Perlos has reached the conclusion
that there are no possibilities to continue production operations in Finland.
The company will discontinue all production operations in Finland, closing its
two facilities in North Karelia by the autumn of 2007 at the latest. In line
with the earlier announcement, the company will also cut overlapping functions
in the organisation, which will lead to personnel reductions in other functions
in Finland as well.
As a result of the aforementioned measures, the company will need to lay off a
total of 1, 132 persons in Finland, of whom 1,052 are working in production
functions and 80 in corporate services. Of the total, 828 are workers, 226
salaried employees and 80 senior-level salaried employees. Majority of the
personnel reductions will be made in the North Karelia area. It is estimated
that the personnel reductions will be carried out by September 2007. The effects
on personnel are presented in more detail in appendix 1.
The following operations will remain in Finland: a head office in Vantaa, as
well as technology services and various support services in Turku, Vantaa,
Ylöjärvi and Joensuu. The total number of personnel remaining in Finland will be
200 people.
As a result of the discontinuation of production operations in Finland, Perlos
expects to incur non-recurring expenses of about EUR 35-40 million, for which a
provision will be booked in the first-quarter result. The bulk of the expenses
will come from write-downs of property, plant and equipment, which will have no
effect on cash flows, and severance compensation for personnel faced with
redundancy.
Some of Perlos' businesses possibly to continue under new owners
During the co-determination negotiations, active efforts have been made to find
out about the possibility of partially continuing the production operations in
Finland. Perlos is currently negotiating with several parties primarily about
the sale of functions unrelated to the manufacture of mobile phone mechanics.
The negotiations concern parts of the special products and connectors business
and the manufacture of injection moulds and assembly lines. The functions
concerned by the negotiations are estimated to employ a maximum of about 130
people.
In addition, Perlos is currently holding discussions with other companies about
the possibility of expanding their operations to Perlos' premises and employing
some of Perlos' personnel.
More detailed information on these projects and their effects on employment will
be disclosed once potential agreements have been reached.
Personnel to receive an extensive support package
In addition to its statutory obligations, Perlos has decided to spend more than
6,000,000 euros on various support measures for personnel who will be laid off.
The support package is intended to help personnel find new jobs, undertake new
training courses and move to other municipalities. The package includes, among
other things, an extra severance payment, support for training, pension
solutions and various services to facilitate re-employment. The main components
of the support package are presented in more detail in appendix 2.
Group organisation to be streamlined
As a part of its profitability improvement programme, Perlos is streamlining its
Group organisation by dissolving the regional organisations in Asia, Europe and
North and South America. Global Manufacturing and Procurement operations will be
concentrated under the Chief Operating Officer, while Sales and Marketing
operations will be organised on a customer account basis. In addition, the
commercialisation of innovations will be boosted by combining the design,
research and development functions into a new Technology Services function.
Changes will be made to the Executive Board in accordance with the new
organisational model. The new Executive Board will have the following members:
President and CEO Matti Virtanen, CFO Juha Torniainen, Chief Development Officer
Tage Johansson, Eila Mustala, Senior Vice President, Human Resources, Chief
Technology Officer Timo Seppä, Chief Operating Officer Jari Varjotie, and Vesa
Vähämöttönen, Senior Vice President, Sales and Marketing.
The new organisation model will be implemented immediately. As a result of the
new streamlined organisation, Perlos will require 200 persons less in senior
management positions and group services outside Finland by the end of this year.
The objective of the profitability improvement programme is to significantly
improve the operating result, excluding non-recurring items, of Perlos'
continuing operations compared with 2006. Perlos intends to achieve this
objective by boosting the efficiency of its operations and by reducing annual
expenses by more than EUR 100 million by the end of 2007. The profitability
improvement programme concerns all of the company's operations in Europe, Asia
and North and South America.
Appendix 1
Effects on personnel by business location
--------------------------------------------------------------------------------
| Unit | Termination of | Pension | Remaining |
| | employment | arrangement | personnel |
--------------------------------------------------------------------------------
| North Karelian | 808 | 24 | 0 |
| plants 1 & 2 | | | |
--------------------------------------------------------------------------------
| Tools Joensuu | 159 | 3 | 0 |
--------------------------------------------------------------------------------
| Assembly | 58 | | 0 |
| Solutions | | | |
| Joensuu | | | |
--------------------------------------------------------------------------------
| Group Services | 55 | 1 | 165 |
| in Vantaa and | | | |
| Joensuu | | | |
--------------------------------------------------------------------------------
| Turku and | 24 | | 35 |
| Ylöjärvi Offices | | | |
--------------------------------------------------------------------------------
| TOTAL | 1 104 | 28 | 200 |
--------------------------------------------------------------------------------
In the end of 2006, the Perlos Group had a total of 12,944 employees, including
5,715 temporary workers. Of them, 4,207 worked in Europe (including 1,105
temporary workers), 7,612 in Asia (including 4,605 temporary workers) and 1,125
in North and South America (including 5 temporary workers). Perlos employed
1,600 people in Finland at the end of 2006.
Appendix 2
Main components of the personnel support package
1. Additional severance compensation
In addition to statutory severance pay, Perlos will pay extra severance
compensation to personnel whose employment will be terminated. The amount of the
compensation depends on time served with the company and on specified metrics
agreed with personnel.
2. Training support and business subsidies
Perlos will pay for reasonable training expenses if an employee is transferred
to new tasks inside Perlos' organisation. At its discretion, the company may
also pay business subsidies or support personnel in other ways in their
retraining or entrepreneurial activities by offering machinery and equipment
being decommissioned and premises being freed up to Perlos employees setting up
their own businesses.
3. Supporting re-employment
Perlos actively supports the re-employment of its personnel through the
following measures, among other things:
- Perlos is actively seeking for other parties to take over the operations to be
discontinued
- Perlos is prepared to offer its premises to other businesses, preferably to
companies that would employ a considerable number of Perlos' current personnel
- Personnel will be immediately informed of all external job offers
- An employment office's service will be brought to the plants
- Co-operation with Employment and Economic Development Centres, employment
offices, JOSEK Ltd (Joensuu Regional Development Company) and other authorities
will be intensified.
4. Extended obligation to re-employ
The statutory nine-month obligation to re-employ will be extended to encompass
all of Perlos Corporation's organisations in Finland. In case of re-employment,
personnel will be reimbursed for reasonable moving expenses within Finland if
their previous employment with Perlos was terminated no more than nine months
earlier and if their new tasks require them to move to a new municipality.
5. Pension solutions
Personnel nearing the retirement age will be offered various pension solutions
in accordance with their remaining working-age years. The pension arrangements
will help support these persons until they begin earning their old-age pensions.
Perlos will also provide an insurance company representative at its plants to
make personal pension calculations and to offer personal advice on pensions. In
addition, the company will arrange general pension information events.
PERLOS CORPORATION
Matti Virtanen
President and CEO
ADDITIONAL INFORMATION:
- A news conference for analysts and media will be held today, March 5, 2007 at
15.00 Finnish time, in Airport Business Plaza, Meeting Room JFK, Äyritie 12 C,
01510 Vantaa, Finland. Welcome.
- CFO Juha Torniainen, is available at 16.00 - 18.00 Finnish time, tel +358 9
2500 7218.
PERLOS IN BRIEF
Perlos Corporation is a global design and manufacturing partner for the
telecommunications and electronics industry. The service offering covers the
whole product life cycle from industrial design to manufacturing, logistics and
new product versions. The production facilities are located in Asia, Europe and
the Americas and the company is headquartered in Finland. Perlos Corporation's
net sales amounted to EUR 673,6 million in 2006. The company employs
approximately 13,000 people worldwide. Perlos share (POS1V) is traded on the
Helsinki Stock Exchange.
DISTRIBUTION
Helsinki Stock Exchange
Media
www.perlos.com
PERLOS’ PROFITABILITY IMPROVEMENT PROGRAMME PROCEEDS: THE COMPANY WILL DISCONTINUE PRODUCTION OPERATIONS IN FINLAND AND STREAMLINE GROUP ORGANISATION
| Source: Perlos