(Reuters) – German machinery and auto parts maker Schaeffler said on Tuesday it plans to cut 4,700 jobs in Europe after its third-quarter operating profit fell nearly 50 percent, underscoring the challenges facing facing the European automobile industry.
“This is the company’s response to the challenging market environment, the increasing intensity of global competition and the ongoing transformation, particularly in the automotive supply industry,” he said. announced Schaeffler in a press release.
The European automotive sector is facing high production costs and a delicate transition to electric vehicles against a backdrop of falling demand and increased competition from Chinese players.
Europe’s largest carmaker, Volkswagen, is considering closing factories in Germany for the first time. Several automotive equipment manufacturers have also issued alerts on results and the French tire group Michelin announced on Tuesday the closure of two sites in France.
For Schaeffler, the job cuts will mainly affect Germany, where around 2,800 positions will be eliminated at ten sites. The other job cuts will concern the whole of Europe, including the closure of two sites, the locations of which have not been specified.
Schaeffler is present in France in Haguenau (Bas-Rhin) and Chevilly (Loiret).
Around 1,000 jobs in Europe will be eliminated through transfers, bringing the total net number of job cuts to 3,700 people.
The German ball bearing specialist hopes to save around 290 million euros per year by the end of 2029 thanks to the efficiency plan, which will cost around 580 million euros.
In the third quarter, earnings before interest, taxes and special items (Ebit) fell 44.9% to 187 million euros while analysts had forecast 209.4 million euros on average according to a consensus poll compiled by Vara Research.
On the Frankfurt Stock Exchange, Schaeffler shares fell 2.6% in the morning.
“Overall, this is a weak quarter and we expect additional pressure on cash flow and balance sheet leverage going forward,” JPMorgan analysts commented in a note.
(Written by Andrey Sychev in Gdansk; Noémie Naudin; edited by Blandine Hénault)
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