Companies operating in emerging and commodity markets are particularly under pressure to save costs. However, we still believe in our own growth opportunities in specific product segments and geographic areas.
As a consequence of this, Konecranes intends to initiate actions aiming at annual cost savings of EUR 25 million by the end of 2017. Approximately a half of the cost savings are expected to be realized by the end of 2016. This has been taken into consideration in the 2016 financial guidance.
To reduce fixed costs and improve efficiency in operations, Konecranes is planning to pursue the following measures to reach the targeted cost savings. Some of the actions mentioned below are already in progress.
– evaluation of business model in certain countries we operate
– closures and rightsizing of manufacturing units and optimization of supply chain
– streamlining product portfolio and related resources
– consolidation of regional functions
To reach the targeted cost savings of EUR 25 million, Konecranes expects to incur restructuring costs of approximately EUR 20 million by the end of 2017.
Konecranes will reduce the number of its internal regions from five to three to create opportunities for further efficiency improvement. The planned changes will not have an impact on the external reporting structure.
“While we are proceeding with the planning of the merger with Terex Corporation (“Terex”), we are actively seeking opportunities to improve our operational efficiency in a marketplace where several of our end-markets are facing macro-related headwinds. The intended actions are necessary and independent of the announced merger with Terex. The execution of these actions will strengthen the foundation of our business in the years ahead,” comments Konecranes President and CEO Panu Routila.