Posted on 07/25/2002 12:09:12 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
ROCHESTER, N.Y. (AP) — Eye-care products maker Bausch & Lomb Inc. said Thursday it will shut down plants in Miami, Spain and South Korea and eliminate about 450 jobs, or 3.75 percent of its work force.
The restructuring was disclosed as the company, boosted by strong sales of newer-style contact lenses, reported that its earnings more than tripled in the second quarter. Its stock jumped nearly 11 percent.
Bausch & Lomb earned $21.8 million, or 40 cents a share, up from $6.8 million, or 13 cents a share, in last year's second quarter. That was 5 cents a share higher than the consensus estimate of 35 cents forecast by analysts surveyed by Thomson First Call.
Sales jumped 14 percent to $458.4 million from $401.7 million.
Its stock rose $3.09, or 10.7 percent, to $32.05 in morning trading on the New York Stock Exchange.
To lower production costs and boost operating profits, Bausch & Lomb said it planned to close or consolidate several plants that make older-style contact lenses and surgical products. The job cuts will be carried out over the next year.
The company will close factories in Barcelona, Spain, and Umson, South Korea, that help manufacture rigid gas permeable, or hard, contact lenses, and a microkeratome plant in Miami. It also will shut down a distribution center in St. Louis next year, eliminating about 50 jobs.
Bausch & Lomb, which employs about 12,000 people, targeted 700 job cuts in January. It also scaled back profit projections amid slowing demand for laser eye surgery equipment and traditional contact lenses quickly being usurped by planned-replacement lenses.
Troubles began building up at the end of 2000 when demand for laser vision-correction machines dipped in tandem with a deceleration in the U.S. economy.
The overhaul will save the company about $16 million in annual costs through 2005. A pretax charge of up to $20 million will be recorded in the third quarter, said Ronald Zarrella, who was appointed chief executive in November.
Zarrella succeeded William Carpenter, who resigned in September. He had previously served as the company's president and chief operating officer but moved to General Motors in 1994, where he ascended to chairman and president of GM North America.
In the quarter, revenues soared 24 percent in the United States, which accounts for 41 percent of its markets.
Contact lens revenues jumped 19 percent, with strong sales of newer planned-replacement and disposable lenses more than offsetting stagnant sales of older-style lenses.
Sales of lens care products, which had been hurt by an inventory glut in the U.S. market last year, raced up 28 percent.
Sales of refractive surgery products fell 13 percent as demand for laser vision-correction machines dipped in tandem with a downturn in the U.S. economy. Sales of cataract surgery products were flat but ophthalmic drugs revenues rose 17 percent.
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