Timken announces restructuring and reorganization of aerospace business
The Timken Company today announced that it is taking multiple actions to improve the performance of its Aerospace business.
The company plans to:
• Eliminate its aerospace segment leadership positions and integrate aerospace activities under the direction of Chris Coughlin, executive vice president and group president;
• Close its aerospace engine overhaul business, located in Mesa, Arizona, by the end of the year;
• Evaluate strategic alternatives for its aerospace MRO parts business, also located in Mesa; and
• Close its aerospace bearing facility located in Wolverhampton, U.K., subject to the employee consultation process, rationalizing the capacity into existing facilities, with timing to be determined.
As a result of these changes, beginning with fourth quarter of 2014, Timken will no longer report Aerospace financial results separately but rather will incorporate aerospace business results primarily within the company's Mobile Industries segment.
In the third quarter of 2014, Timken expects to record a non-cash charge of $110 to $120 million (pre-tax) comprised primarily of goodwill and inventory impairments. In addition, cash charges related to the facility closures are expected to be less than $10 million (pre-tax), primarily consisting of severance, and will be recorded as incurred. The above actions are expected to have negligible impact on the company's 2015 revenues, with Mobile Industries EBIT margins for 2015 targeted in the previously communicated 10 to 13 percent range.
"Aerospace has been and will continue to be an important market for Timken," said Richard G. Kyle, Timken president and CEO. "It fits the Timken Business Model well and we will continue to pursue challenging applications that value our technology and our service.
"While the segment's overall performance has been weak, we expect that the actions we've outlined will improve returns and generate growth going forward," Kyle said. "We remain committed to creating value for customers in the aerospace industry and are confident that our efforts will improve the strength of our business for both customers and shareholders going forward."
Press release issued by The Timken Company on September 8, 2014
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