LONDON (Jan. 20)—Avon Rubber P.L.C. expects to take charges of about $11 million this year against earnings to cover consolidations and other moves associated with a reorganization of its operations.
The bulk of the changes are expected to occur in western Europe, where the company faces a capacity-demand imbalance in its automotive supply activities, Chairman Trevor Bonner said at the firm's annual shareholders meeting in London.
The reorganization should yield annual savings of about $5.5 million, Bonner said.
The company singled out its water hose business for consolidation to fewer locations. At the same time, it is looking for opportunities in Turkey to set up automotive hose production to meet demand from its international automotive customers with operations there.
Avon said it expects first-half sales and pretax profits to fall below those of a year ago, despite improvements seen in the second quarter. Management expects actions already taken, together with those planned, to yield an improved second-half performance and a full year earnings in line with current market expectations.