- Actions include streamlining administrative and non-production functions across the organization
- Footprint optimization and site specialization actions to reduce costs and improve productivity
- Expect recurring savings of approximately $300 million by the end of 2018; charge to be recorded in 2016-2017 to support actions
Bombardier announced today a series of actions as it continues to execute its five-year turnaround plan launched last year. The actions support the company’s efforts to build its earnings growth potential and highlight its focus on improving productivity, reducing costs and optimizing its worldwide footprint to deliver increased value to customers and shareholders.
“After successfully de-risking our business last year, our focus has shifted to building a clear path to profitable earnings growth and cash generation. The actions announced today will ensure we have the right cost structure, workforce and organization to compete and win in the future,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “We are confident in our strategy, our leadership team and our ability to achieve both our 2016 goals and our 2020 turn-around plan objectives.”
Specific actions to be taken by the company include streamlining its administrative and non-production functions across the organization and leveraging its worldwide footprint to create centres of excellence for design, engineering and manufacturing activities in both its aerospace and rail businesses.
Approximately 7,500 positions will be impacted as the company executes its workforce optimization and site specialization actions through 2018. The impact of these restructuring actions on overall employment will be partially offset by strategic hiring to support the ramp-up for key growth programs, including the C Series and Global 7000, as well as to support major rail contract wins.
As a result of the actions announced today, the company expects to achieve recurring savings of approximately $300 million by the end of 2018.1 The company anticipates recording $225 million to $275 million in restructuring charges that will be reported as special items when accrued, starting in the fourth quarter of 2016 and continuing through 2017.
“When we launched our turnaround plan last year we committed to transforming our company; to reduce costs, to leverage our scale and to become more efficient in all our operations, and that is exactly what we are doing,” said Bellemare. “While restructuring is always difficult, the actions announced today are necessary to ensure Bombardier’s long-term competitiveness and position the company to continue to invest in its industry leading portfolio while also deleveraging its balance sheet.”
Bombardier is the world’s leading manufacturer of both planes and trains. Looking far ahead while delivering today, Bombardier is evolving mobility worldwide by answering the call for more efficient, sustainable and enjoyable transportation everywhere. Our vehicles, services and, most of all, our employees are what make us a global leader in transportation.
Bombardier is headquartered in Montréal, Canada. Our shares are traded on the Toronto Stock Exchange (BBD) and we are listed on the Dow Jones Sustainability North America Index. In the fiscal year ended December 31, 2015, we posted revenues of $18.2 billion. News and information are available at bombardier.com or follow us on Twitter @Bombardier.
Bombardier, C Series, Global, Global 7000 and The Evolution of Mobility are trademarks of Bombardier Inc. or its subsidiaries.
1. Refer to the Forward-looking statements section at the end of this press release.
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This press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to the Corporation’s objectives, guidance, targets, goals, priorities, market and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an industry; expected growth in demand for products and services; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry-into-service of products and services, orders, deliveries, testing, lead times, certifications and project execution in general; competitive position; the expected impact of the legislative and regulatory environment and legal proceedings on the Corporation’s business and operations; available liquidities and ongoing review of strategic and financial alternatives; the effects of the investment by the Government of Québec in the C Series Aircraft Limited Partnership (the C Series Investment) and of the private placement of a minority stake in Transportation by the CDPQ (the CDPQ Investment and, with the C Series Investment, the Investments) on the range of options available to us, including regarding our participation in future industry consolidation; the capital and governance structure of the Transportation segment following the CDPQ Investment, and of the Commercial Aircraft segment following the C Series Investment; the impact and expected benefits of the Investments on our operations, infrastructure, opportunities, financial condition, access to capital and overall strategy; and the impact of the Investments on our balance sheet and liquidity position.
Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require management to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecast results set forth in forward-looking statements. While management considers these assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate.
Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, risks associated with general economic conditions, risks associated with our business environment (such as risks associated with the financial condition of the airline industry, business aircraft customers, and of the rail industry; trade policy; increased competition; political instability and force majeure), operational risks (such as risks related to developing new products and services; development of new business; the certification and homologation of products and services; fixed-price and fixed-term commitments and production and project execution; pressures on cash flows based on project-cycle fluctuations and seasonality; our ability to successfully implement and execute our strategy and transformation plan; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; the environment; dependence on certain customers and suppliers; human resources; reliance on information systems; reliance on and protection of intellectual property rights; and adequacy of insurance coverage), financing risks (such as risks related to liquidity and access to capital markets; retirement benefit plan risk; exposure to credit risk; substantial existing debt and interest payment requirements; certain restrictive debt covenants; financing support provided for the benefit of certain customers; and reliance on government support), market risks (such as risks related to foreign currency fluctuations; changing interest rates; decreases in residual values; increases in commodity prices; and inflation rate fluctuations). For more details, see the Risks and uncertainties section in Other in the Management’s Discussion and Analysis (MD&A) of the Corporation’s financial report for the fiscal year ended December 31, 2015. For additional information with respect to the assumptions underlying the forward-looking statements made in this press release, refer to the Guidance and forward-looking statements sections in the MD&A of the Corporation’s financial report for the fiscal year ended December 31, 2015.
Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. The forward-looking statements set forth herein reflect management’s expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, the Corporation expressly disclaims any intention, and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.