BOC to make 1,700 job cuts and pounds 85m charge: Group will also lose chairman a year early
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Your support makes all the difference.TOUGH trading conditions have forced BOC, the industrial gases group, into a new round of cutbacks involving 1,700 jobs and an pounds 85m restructuring charge.
The move, which surprised City analysts, was accompanied by the news that Pat Rich is to retire as chairman in April. Mr Rich, who last month stepped down as chief executive, is leaving the group about a year earlier than planned because of ill health.
BOC said it had identified 'sizeable opportunities' to reduce overheads and operating costs. But it declined to say how many jobs would be lost in Britain.
'In view of the increasing competitive pressure and eroding margins over the past few years, we have engaged in an in-depth study of these businesses, our organisation structure and cost base,' it said.
BOC is making an pounds 85m provision against the restructuring in this year's results. But the steps are expected to produce annual savings of almost pounds 60m within three years.
About pounds 60m of the charge relates to its healthcare operations, which have been hit by the expiry of patent for its leading anaesthetic, Forane. This has prompted a flood of cheaper competitors who have taken away about half of Forane's market share.
Pat Dyers, chief executive, said profits from the division would remain depressed by the competition, though a new replacement, Suprane, was 'progressing well'.
The restructuring is expected to produce pounds 12m cost savings in health care this year, rising to pounds 35m a year by 1996.
About pounds 25m of the write-offs are being made in BOC's industrial gases business, which is also facing tough trading conditions in key markets including Europe and Japan. But it hopes to lower the division's cost by pounds 8m this year, climbing to pounds 23m annually by 1996.
Speaking at the annual shareholders meeting, Mr Dyer said: 'Trading in the current year is in line with expectations but there are only limited signs of improvement in the economic environment.'
Yesterday's moves prompted City analysts to cut their full-year profits forecasts from about pounds 330m to pounds 250m before tax for the year ending 30 September.
But BOC shares climbed 33p to 699p on hopes that the cost-cutting would boost its performance.
Dutch chemicals group DSM has denied that it planned to withdraw from the petrochemicals sector as losses on ethylene production were too high, Reuter reports.
'DSM declares emphatically that this does not reflect reality, nor the intentions of our company,' it said. Earlier this week Simon de Bree, chairman, said the company was actively seeking to build an alliance with a strong partner in ethylene, an important feedstock for making plastics.
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