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Johannesburg - Bell Equipment CEO Gary Bell on Wednesday told I-Net Bridge that government had reacted too slowly with its distressed sector programme to have an impact on its forced retrenchments.
As part of Bell's total programme to right-size the business to operate at a level of 50% of the 2008 sales, it has reduced the number of employees by 617 compared with June 2008. Some of this was by natural attrition and it is currently in the process of finalising a voluntary retrenchment initiative, which it expects will result in a staff reduction of close to 300.
"When this programme is completed and after having exhausted the required legal procedures, we will be forced to consider the triggering of a general retrenchment of excess employee requirements.
"It is a fine judgment call as to how far the dismissals can go without materially damaging the future of Bell. We are awaiting details of the government's distressed sector programme and possible training time assistance, which could reduce some of the general retrenchments," it said.
In an interview with I-Net Bridge, Bell said that as far as the distressed sector programmes were concerned "none are effective at this time".
"It's going to take too long to roll out to save jobs this year, but perhaps next year," he said of the programme, adding that there "does not appear to be too much organisation at this time".
He said that the assistance, in the form of a R150m loan agreement from the Industrial Development Corporation (IDC) only last week, was "the only visible help so far".
The group also announced that additional financing has been obtained from IA Bell & Company subsequent to half-year end. The initial facility of R150m provided by the shareholder has been increased to R300m.
The additional facility is on the same terms and conditions as the original facility and is repayable on the later of June 30 2010 or when the group's gearing is sustainably maintained at 20% or less.
On Tuesday Bell reported a diluted headline loss per share of 191c for the six months ended June after diluted headline earnings per share of 275c a year ago.
Worst results in history
The group said reduced demand and difficult trading conditions as a result of the global economic recession impacted on the liquidity and trading results of the group.
Sales revenue was down 51% to R1.375bn and gross profit is down to R322.9m from R712.5m.
The company described the past six months as the worst results in the Bell group's history. The turmoil from the ongoing global recession continues to deeply impact on sales for the industry, however it is managing the company to generate cash flow from a reduction in inventory and receivables, it said.
Parts and service sales represented 26.2% of total sales for the six months as compared to 14.9% of total turnover in the first six months of 2008.
Bell said that there were signs that the market was staring to pick up, particularly with commodities showing signs of "spark". "We are still taking a conservative approach and are rightsizing for that viewpoint," he said.
The group is working with a robust plan to right size the company to make it more agile and profitable in 2010 and beyond. "It is important that when the markets do improve we have as much of our human capital and supply base intact as is possible," it said.
- I-Net Bridge
