Vossloh AG has signed a contract with a ‘strategic buyer’ for the sale of Cleveland Track Material (CTM), its largest U.S. company in the Customized Modules division. EUR 35 million is the purchase price and net inflow of funds. The transaction is expected to be closed during this year as it does not depend on regulatory approvals.
In 2007, Vossloh acquired Cleveland Track Material, a manufacturer of special track material, which owns three facilities located in Cleveland (Ohio), Reading (Pennsylvania), and Memphis (Tennessee).
The sale is part of Vossloh performance programme which was adopted by the company in April 2019. The objective of this program is, among other things, the divestment of loss-generating or underperforming activities. “Our performance programme is aimed at strengthening Vossloh in terms of profitability and self-financing power. With the sale of CTM, we have reached an important milestone in this respect. Now it is time to systematically implement further measures within the Group in order to further strengthen our competitive position”, Oliver Schuster, CEO of Vossloh AG, said.
In the same time, the Executive Board of Vossloh AG has adopted additional measures to streamline the portfolio in the Customized Modules division. This affects all current activities of this division in the USA and South America. The companies affected, including CTM, generated sales in the 2018 fiscal year of around EUR 65 million and negative EBIT or significantly below-average profitability over several years. Vossloh currently expects exceptional noncash charges in connection with these transactions of around EUR 40 million in the current fiscal year and overall in connection with the disposal of loss-making activities special charges of around EUR 55 million which are largely noncash effective. Worldwide
In recent months, Vossloh initiated necessary measures to reduce the number of employees by around 5 percent compared with the end of 2018. Expenses for staff reductions in the order of around
EUR 30 million are currently expected for 2019. The corresponding cash outflows and employee departures will affect the years 2019 and 2020.
In connection with the performance programme, EUR 85 million is the estimated value of the total expenses in the 2019 fiscal year.
Overall savings through the performance programme will total around EUR 15 million to EUR 20 million per fiscal year, of which a large proportion will already take effect for the first time in the 2020 fiscal year.
For the 2019 fiscal year, Vossloh expects sales of between EUR 900 million and EUR 1 billion. The EBIT expected for the operational business will probably be in the lower third of the forecast range of between EUR 50 million and EUR 60 million, in particular due to the weak business development of CTM, the company which has been sold. As a result of the streamlined portfolio, Vossloh now also expects Group sales of between EUR 900 million and EUR 1 billion but a significantly improved EBIT between EUR 65 million and EUR 80 million in the 2020 fiscal year.