Electronics Production | September 08, 2011

Cencorp starts statutory negotiations in Finland

Cencorp weakens its outlook for 2011 and issues profit warning. Furthermore, the company has started statutory negociations concerning lay-offs in Finland.
Cencorp estimates that the full-year net sales and result from operations will remain lower than earlier forecast. According to the forecast updated due to sharply weakened market situation, the net sales for 2011 are estimated to be some EUR 25 million and the operating profit to remain lower than in 2010, provided that the operating environment and the current economic landscape will not substantially change.

According to the earlier estimate, Cencorp expected net sales for 2011 to amount to approximately EUR 35–39 million, provided that no essential change takes place in the current economic landscape. The 12-month result from operations was expected to improve from 2010.

Recession threatening the global economy has postponed industrial investment decisions and, therefore, significantly decreased the net sales and result forecast for Cencorp’ Laser and Automation Applications segment. The change has been quicker than anticipated and led to a situation where investments by customers related to this segment have been canceled or postponed by more than EUR 5.5 million.

Longer than estimated processes from tenders to orders in the renewable energy applications had also a substantial impact on the weaker net sales estimate. The company had earlier expected the first significant order to be finalized during September 2011, but according to the current estimation, this timetable is not going to materialize. The first order in this growing segment is still possible during 2011, but as a prudence measure, the company will not include this order in the updated 2011 forecast.

The changes that are currently taking place in the competitive landscape for mobile phones and a drop in the market share of one of the major customers have further weakened the net sales development and profitability in the Special Components segment.

Cencorp’s order stock was EUR 2.9 million on 15 August 2011, the publishing date of the January-June interim report, and EUR 2.9 million on the publishing date of this release.

Measures that were launched already during the first quarter of the year in order to rationalize the operations and improve profitability have stepped up in the Special Components segment, among other things, by concentrating manufacturing in China on two plants instead of the previous three. The rationalization measures will be continued by focusing on those product groups in which growth and profitability can be achieved without remarkable investments.

Furthermore, Cencorp responds to the changes in the market situation by starting statutory negotiations in order to lay off the Finnish personnel in phases, according to the demand, for no more than 90 days. The statutory negotiations concern all employees in Finland, e.g. some 68 people.

In 2011, Cencorp’s net sales were EUR 12.8 million. The net sales were increased by the integration of the Face business, i.e. the current Special Components segment, into Cencorp by EUR 1.7 million. Alongside the electronics industry, Cencorp will actively focus on new emerging markets, such as energy production and energy supply applications for mobile equipment. In these selected areas, the company seeks a leading position as a supplier of special technology in the long term.
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