Cardinal slashes jobs in restructuring
Health has added detail to its previously announced restructuring
initiative with the news that it plans to cut 4,200 jobs and close
25 facilities around the world.
The company, which has just cut its 2005 earnings outlook - forecasting a decline of 15 per cent in the first half of the year excluding restructuring charges - said in a press statement that the three-year plan, first announced in September, also involves buying back $500 million (€376m) in stock. The aim is to boost operating earnings by $500 million.
Cardinal expects to take charges of between $230 million and $270 million, including some $75 million in impaired asset writedowns.
Most of the cuts are expected in the firm's wholesale and manufacturing units. The wholesale business in particular has been hit by a change in the marketplace whereby drug companies have tightened their inventory control. This has prevented Cardinal and other wholesalers stockpiling medicines and selling them after price increases.
"We are bringing the company together by integrating externally to align our businesses for customers and internally to become even more efficient," said CEO Robert Walter in a statement.
Cardinal hopes return to earnings growth in the second half of 2005, suggesting that full-year earnings-per-share growth would be in the low single digits, excluding special items and non-recurring charges, below its earlier forecast of 10 per cent EPS growth.
The move follows a difficult period for the company, which in September announced plans to restate past financial reports covering nearly four years, as well as a delay in filing its latest annual report.
