Industrial Major Textron To Slash 2% Of Workforce, Anticipates $75M In Annual Savings

Textron Inc TXT said its Board of Directors has approved a restructuring plan developed by management in connection with the company’s annual operating plan process. 

The restructuring plan is expected to slash about 725 positions across the impacted segments, representing 2% of the company’s global workforce.

According to the plan, Textron will reduce operating expenses through headcount reductions at the Industrial, Bell and Textron Systems segments. 

In the Industrial segment, jobs cuts are expected at Textron Specialized Vehicles, resulting from lower demand for certain powersports products and at Kautex due to a slump in demand for fuel systems from European automotive manufacturers.

In both the Bell and Textron Systems segments, the plan includes targeted headcount reductions to enhance cost structures and realign their workforces as these segments transition from legacy production contracts to more development, engineering-focused contracts.

The restructuring plan is also expected to result in impairment charges related to fixed and intangible assets within the powersports product line at Textron Specialized Vehicles and fixed assets at Kautex, resulting from lower planned production levels due to lower demand, which the company expects will continue.

In Q4, Textron expects to incur pre-tax special charges related to the restructuring plan of about $115 million-$135 million.

The company anticipates severance and related costs of $35 million-$45 million and asset impairment charges of $80 million-$90 million.

TXT anticipates annualized gross cost savings of approximately $75 million upon completion of the restructuring plan.

Textron expects the plan to be completed in the first half of 2024 and cash outflows for the restructuring to be $35 million-$45 million. 

The restructuring plan and related costs and asset impairment charges will have no impact on Textron’s financial outlook for 2023.

Price Action: TXT shares closed lower by 0.70% at $76.67 on Tuesday.

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