Cencorp takes write-off on closing its loss-making factory in Guangzhou

Cencorp Oyj (OMXH: CNC1V) lowered its full year sales estimate and takes a 5.7 million Euro write-off on fixed assets as well as a 1 million Euro provision reflecting how expensive it tends to be to exit a business in China. The decoration business in Guangzhou has been making heavy losses. Last year it was 2.8 million Euros in the minus and during the first quarter the pace escalated further to nearly a million. The closure will result in lost job for approximately 110 people. The company continues operations at the Beijing plant, which does completely different type of business, as usual.

Sales outlook is affected, with sales from continuing operations expected to be lower than last year. The company is guiding positive EBITDA provided that no essential changes in economic outlook or operating environment take place. The struggling firm has also completed co-determination negotiations in Finland, resulting in 14 people getting the axe. Closure of (miniscule scale) operations in other geographies is also taking place. The full affect of restructuring is estimated to result in 2.5-3 million Euros in annual savings. The company will now focus on clean technology applications and laser and automation equipment and applications management.