Concentric AB, which acquired GKN Sinter Metals de Argentina SA (GKN Pumps) earlier this year, has announced plans for the restructuring of the facility in Chivilcoy, Argentina, due to the weak demand in the South American commercial vehicle market.
The company has stated that it anticipates a headcount reduction of 34 employees that were engaged at the date of acquisition. Part of the headcount reduction has already been delivered and the remaining will be delivered through a mix of voluntary and compulsory redundancies. It was stated that the move will help bring Concentric Chivilcoy’s margins in line with the rest of the group.
The redundancy programme will result in annual savings estimated at MSEK 9. Concentric stated that the total one-off expenses recognised for the restructuring plan at the renamed Concentric Chivilcoy plant amount to MSEK 14.
“As noted in our Q1 2015 interim report, Concentric has recognised MSEK 15 of income arising from negative goodwill as the fair value of the net assets acquired with GKN Pumps exceeded the purchase price. Historically, GKN Pumps has been an unprofitable venture and, as a result, the seller approached Concentric intent upon a strategic exit from the pump manufacturing business. This, together with the apparent over manning in the Chivilcoy facility at the date of acquisition, enabled Concentric to agree a favourable purchase price.”
With the acquisition of GKN Sinter Metals de Argentina SA, Concentric gained an important foothold in the Mercosur trade union, thereby enabling further penetration of the South American commercial vehicle market.