Hill-Rom Holdings (NYSE:HRC) announced today that it will cut about 350 employees in efforts to save about $30 million annually as the device maker looks forward to a potentially tough year.
The Indiana device maker lowered its 2014 earnings guidance after posting a sharp decline in losses and sinking sales in Q1. Hill-Rom’s adjusted per-share earnings of 36¢ missed analysts’ estimates by 15¢. Full year revenue is projected to decrease 2-4%, as is Q2 revenue.
The news sent HRC shares down more than 14% today, when they were trading at $37.91 as of about 12:30 p.m.
In addition to streamlining operations in the U.S. and overseas, Hill-Rom will close 1 European manufacturing facility and downsize the rest of its offices in the region, according to a press release.
The employee terminations represent about 5% of Hill-Rom’s global workforce, and the U.S. restructuring measures are projected to take place during Q2. The European manufacturing cuts will take place over the course of the next 2 years.
"When all actions are complete, savings are expected to be approximately $30 million on an annual basis," according to a company statement. "Savings in 2014 are expected to exceed $8 million, excluding restructuring charges."
Hill-Rom estimated that all restructuring efforts would cost about $50 million, with about $15-20 million of that in Q2 2014.
The news came amid a rough quarter for Hill-Rom, with an 8.2% drop in sales and a 45% drop in profits. The Batesville, Ind.-based company reported profits of $13.2 million, or 22¢ per diluted share, on sales of $393 million for the 3 months ended Dec. 31, 2013. That compared with profits of $24 million, or 39¢ per share, on sales of $428 million during the same period the previous year.
