Eaton Announces $145M Restructuring; Asks Some Employees to Take Unpaid Time Off
Eaton Second Quarter Operating Earnings Per Share of $1.16, Above Midpoint of Guidance and Up 5 Percent Over Second Quarter of 2014
Although 2nd quarter earnings were up over last year, the company announced it is implementing a restructuring program, intended to cut $145 million from its cost structure. That will include some unpaid time off for many of Eaton’s managers.
“Eaton has asked its mid-level salaried employees and above around the world — including senior management — to take a one-week, unpaid leave of absence where legally allowed in the third quarter to further control costs,” company spokesman Scott Schroeder said.
Sales for the Electrical Products segment were $1.8 billion, down 3 percent from 2014. Organic sales grew 3 percent, which was more than offset by a 6 percent decline from currency translation. Operating profits were $276 million. Excluding acquisition integration charges of $6 million during the quarter, operating profits were $282 million, down 10 percent from the second quarter of 2014.
“Our bookings in the second quarter in the Electrical Products segment were up 4 percent over the second quarter a year ago,” said Alexander M. Cutler, Eaton chairman and chief executive officer. “Continuing the pattern of recent quarters, demand was strongest in our Americas region.”
Sales for the Electrical Systems and Services segment were $1.5 billion, down 8 percent from the second quarter of 2014. Organic sales were down 4 percent and negative currency translation was 4 percent. The segment reported operating profits of $223 million. Excluding acquisition integration charges of $4 million during the quarter, operating profits were $227 million, up 10 percent from the second quarter of 2014.
“Our organic sales declined 4 percent in the second quarter, reflecting the softness we saw in bookings during the second half of 2014 and the first quarter of 2015,” said Cutler. “Bookings in the second quarter were down 7 percent from the second quarter of 2014.
“The Electrical markets in the second quarter of 2015 were sluggish, with strength in lighting and U.S. residential offset by global weakness in oil and gas and other industrial markets,” said Cutler.