UPDATE 1-Zumtobel slashes jobs to boost margins

Wed Apr 2, 2014 3:18am EDT

Related Topics

* Zumtobel to cut 600 jobs, targets 8-10 pct EBIT margin

* 15-20 mln restructuring costs in Q4, and again in 2014/15

* Shares down 0.4 pct (Adds details on cost-cutting measures, competitors)

VIENNA, April 2 (Reuters) - Austrian lighting group Zumtobel said it plans to axe 8 percent of its workforce to double its operating profit margin by 2016/17, as it struggles against nimbler Asian rivals.

Zumtobel, which brought in ex-Infineon manager Ulrich Schumacher as chief executive after its two top executives quit in August, said it would cut 600 jobs over the next few quarters by merging some plants and sales operations.

The company, which is racing to switch to LED lighting from traditional lightbulbs, said its margin for adjusted earnings before interest and tax (EBIT) should improve from around 4 percent to 5-6 percent in 2014/15 and 8-10 percent by 2016/17.

The cost-cutting measures will entail restructuring costs of 15 to 20 million euros ($21 to $26 million) in the fourth quarter ending this month and similar restructuring costs in 2014/15, it said on Wednesday ahead of a capital markets update.

Zumtobel, like its European rivals Osram and Philips, is battling competition from Asian providers including Samsung Electronics and Toyoda Gosei who are unencumbered by legacy lighting operations.

Schumacher, known as a tough restructuring manager at German chipmaker Infineon, said in November and again in December that large-scale job cuts were not part of his plan.

Zumtobel shares slipped 0.4 percent to 18.80 euros by 0712 GMT, following a 5 percent rise on Tuesday in antipication of the mid-term targets announcement. ($1=0.7249 euros) (Reporting by Georgina Prodhan; Editing by Greg Mahlich and Michael Shields)

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