Tecumseh suffers $63.3m loss and announces job cuts
GLOBAL compressor manufacturer Tecumseh Products has suffered a net loss of $63.3m for the fourth quarter, resulting in the firm planning more job cuts for 2009.
The company, which this week announced its financial results for the fourth quarter and full year ended December 31, 2008 is making the job cuts across its global operations and is working on consolidating its production capacity.
Tecumseh has already reduced its headcount by 2,400 people in 2008.
Ed Buker, chairman, president and CEO of Tecumseh Products said 'Although the depth and speed of the downturn in the quarter was unexpected, we have taken decisive action to mitigate the effects of the recession on our results'.
He added 'The current slowdown is affecting all of the company's global markets with nearly equal severity. To address market conditions and improve its competitive position, the company has accelerated certain restructuring activities which involve the idling of underutilized assets as well as enacting further reductions in employment levels throughout its operations worldwide'.
In the latter half of 2008, global economic conditions hit Tecumseh's sales figures hard. Compressors for commercial and aftermarket applications were down by $25m (5%) when compared to full year ended results for 2007 and compressors for air conditioning and other applications were down $17m. Compressors for household refrigeration and freezing applications were affected most significantly - down $106m (27%).
When compared to the fourth quarter of 2007, commercial and aftermarket applications saw a sales dive of $38m (down 32%) and the household refrigeration and freezer applications was hit by a sales drop of $45m (56%).
The company attributed these falls to the global contraction in the market which has driven a decline in new store growth and delays in cold chain development.
Also for the fourth quarter, air conditioning and other applications were down $4.8 million. The firm says this was partly driven by cooler than normal weather in the high-temperature, high-humidity parts of the world where Tecumseh's air conditioning compressors are sold.
The Tecumseh CEO added 'Although we made significant progress in reducing costs and increasing global operating efficiency in 2008, the rapid decline in market demand undermined some of our efforts. Consequently, we will continue to evaluate our production footprint and corporate infrastructure with a view to making further adjustments to our operations in light of evolving industry conditions.'
The company expects its 2009 sales volumes to decline by 15% as compared to 2008 levels.
Tecumseh is scheduled to host a conference call to report on the company's fourth quarter 2008 results on Tuesday, March 17, 2009.