Measures within Orrefors Kosta Boda AB, new financing agreement and revised forecast
Measures within Orrefors Kosta Boda AB
New Wave Group AB and Orrefors Kosta Boda AB (OKB) has decided to initiate trade union negotiations concerning extensive measures within OKB in order to create conditions for an immediate and long term profitability in the company. New Wave Group AB has during the years 2008-2012 covered losses in OKB in approx. 300 MSEK. With the present economic uncertainty and economic development we don’t see any possibility to achieve an acceptable profitability during a foreseeable future without taking extensive measures. Additionally, the strong Swedish currency has also had a negative impact on OKB’s exporting business. During the period mentioned and including planned measures OKB has burdened the result of New Wave Group with a total amount of approx. 512 MSEK.
The planned measures means that OKB is transformed into a design- and market focused company which as organization is to a high degree similar to the other companies and trademarks within New Wave Group. Included in the total measures is an extensive review of OKB’s product assortment, pricing strategies and purchasing channels. The company also plans an extensive change of strategy when it comes to business model and trademarks and intends to increase its investments in marketing.
As a consequence of the proposed measures OKB intends to reduce its workforce by approximately 130 employees at the company’s places of business in Sweden (Orrefors, Kosta and Åfors). The downsizing occurs mainly in production, but other departments in the company will also be subject to cutbacks.
Estimated costs for the planned re-structuring within OKB will be reserved during the third quarter 2012 in a total amount of approx. 212 MSEK. The reservations affecting earnings are distributed between the following preliminary main items.
Termination salaries etc. 40 MSEK
Write-down of stock 109 MSEK
Write-down of real estate 20 MSEK
Write-down/retirement of machinery/inventories 20 MSEK
Write-down of trade receivables 18 MSEK
Other costs 5 MSEK
Except for termination salaries, only 5 MSEK affects cash-flow. The Write-down of stock corresponds to the estimated production value and purchase value for the products in the new organization. After the write-down of real estates and machinery/inventories these assets are almost fully written-down. The write-down of trade receivables is related to OKB’s distributor in Greece. An amortization plan is in place and securities exist for the claim in question and the write-down is conducted as a pure security measure in case of an eventual deepened Greek crisis or a possible Greek exit from the Euro-zone. Following this write-down neither OKB nor the Group has any credit exposure in relation to the Greek market.
Within OKB’s production the measures means that the company plans to discontinue production at the glassworks located in Åfors and Orrefors. However, OKB will offer both of these production facilities for sale.
The intention is to concentrate production to the glassworks located in Kosta, which will continue to produce OKB’s premium products and art glass.
With planned changes New Wave Group estimates that OKB will achieve profitability already starting from fourth quarter this year with additional profit improvements during 2013 and continuing. The purpose is to secure OKB’s and the trademarks ORREFORS’ and KOSTA BODA’s survival and to achieve sound conditions for a positive development in the future. A target is also to secure continued production of premium products and art glass in Sweden.
As a part of the planned measures Magnus Andersson has been appointed new CEO of OKB and will start his employment on November 5, 2012. Magnus Andersson arrives from the position as CEO of Nimbus Boats. He has previously been CEO of New Wave Group’s subsidiaries Sagaform and OKB. Magnus has also been appointed manager of the segment Gifts & Home furnishing within New Wave Group and will lead the re-structuring work within OKB. The present CEO, Ann Gustafsson, will continue as Chief Operating Officer at OKB.
New financing agreement
New Wave Group AB has, in connection herewith, signed a new group-level financing agreement for three years with its bank providing a credit frame in the total amount of 2,2 billion SEK.
Revised forecast for New Wave Group AB
New Wave Group AB has previously communicated the following forecast: “For 2012 we expect a higher turnover and a result around the 2011 outcome”.
The planned measures within OKB means that New Wave Group AB revises down the forecast communicated earlier stipulating a higher turnover and a result around the 2011 outcome. Hence, the Board of Directors of New Wave Group AB makes the following revised forecast:
“For 2012 we expect a higher turnover and a result before tax around zero”
A press conference will be held at 11:00 AM in Kosta at Kosta Boda Art Hotel in the Glass bar, entrance opposite Kosta Outlet.
Göteborg, October 2, 2012
New Wave Group AB (publ)
CEO and President
Tel: +46 (0)701-69 05 00
Because of upcoming information meetings with staff and press conference Torsten Jansson might be difficult to reach before 1 PM today. For more information please contact primarily:
Lars Jönsson, CFO
Tel: +46 (0)31-712 89 12
Göran Härstedt, Chairman of the Board of Directors, Orrefors Kosta Boda AB
Tel: +46 (0)703-62561