As a result of the sharp drop in orders in the first nine months of 2023, Homag has announced that it will cut around 600 jobs worldwide, 350 of them at its German plants alone. Numbers that – as explained by the company – are higher than expected, despite the fact that – thanks to the high order backlog at the beginning of the year – the company’s turnover and profits in the first three quarters of 2023 remained at the high level of the previous year.
“After extraordinarily heavy capital spending by our customers in 2021 and 2022, we had anticipated a cyclical downswing. However, with order intake down by almost one third worldwide, this downturn is substantially more pronounced than expected”, says Dr. Daniel Schmitt, Chief Executive Officer. “We must respond to this and have therefore swiftly assembled a package of measures to adjust capacity and discussed these with the employee representatives”.
The Homag Group plans to cut just under 600 jobs worldwide and expects this to produce savings of around 25 million euros next year and roughly 50 million euros per year from 2025. Roughly 350 of the 600 jobs are to be eliminated at the German facilities. In Germany, this is to be done by means of voluntary programs as well as phased-retirement models to reduce social hardship. Lay-offs for operational reasons are currently not planned but cannot be ruled out. In addition to reducing jobs, the Homag Group also plans to make use of other flexibilization instruments such as the reduction of working-hour accounts and short-time work and has imposed an extensive freeze on new recruitment.
Between January and September 2023, order intake decreased by 32 percent to EUR 968 million (previous year: EUR 1,418 million). In terms of sales, which increased slightly again compared to the previous year’s high figure to EUR 1,222 million (previous year: EUR 1,195 million), the Homag Group continued to benefit from the very large order backlog that it had amassed at the beginning of the year. This order backlog was gradually run off, dropping to EUR 832 million as of September 30, 2023 (September 30, 2022: EUR 1,256 million). At EUR 93.2 million, Ebit before extraordinary effects remained at the previous year’s high level (EUR 92.4 million). As of September 30, 2023, the Homag Group had 7,482 employees (September 30, 2022: 7,462).
The extraordinary expenses resulting from the package of measures are valued at 35 to 50 million euros and will be placed on the books in the fourth quarter of 2023. As a result, the Homag Group’s full-year earnings before tax and before profit transfer will fall short of the previous year in 2023.
“The sharp decline in order receipts will hit us with a delayed effect and result in a substantial decline of up to 15% in sales in 2024”, explains Dr. Daniel Schmitt. “With this package of measures, we want to adjust our cost structure so as to limit the impact on our earnings. We stand to benefit from this in the medium and long term and will grow again profitably when the next upswing emerges”.