UPDATE: Assa Abloy To Close 15 Units, Cut 1,800 Jobs

Assa Abloy AB (ASSA-B.SK), the world's largest lock maker by sales, Thursday became the latest Swedish company to make a swathe of job cuts in response to the economic downturn, announcing a new sweeping 1.18 billion Swedish kronor ($141.8 million) restructuring program that includes shutting down 15 productions units and laying off 1,800 employees.

Assa Abloy's move follows moves to cut more than 14,000 jobs at truck maker Volvo AB (VOLV-B.SK), 1,200 layoffs at telecoms company TeliaSonera AB (TLSN.SK), 1,000 at engineer Alfa Laval AB (ALFA.SK), 3,000 at consumer goods maker Electrolux AB (ELUX-B.SK) and 1,000 at auto parts maker Autoliv Inc. (ALV), among others.

In November, the last jobless data available, Swedish unemployment jumped to 6.2% from 5.7% in October - a bigger rise than economists had expected. Unemployment is expected to continue to climb.

Assa Abloy said it will consolidate administrative support functions and move to final assembly work in the remaining 25 units in high-cost countries.

The restructuring plan is on top of measures already announced and involves an extra 600 job cuts than previously announced. Together with a cost-cutting plan unveiled a couple of years ago, Assa Abloy is cutting about 3,800 jobs. It had 33,051 employees at the end of September.

The cost has risen from a previous estimate of SEK800 million. The company already has booked SEK247 million against earnings in the third quarter.

It expects to recoup the costs in two to three years, and said all its divisions will be affected.

Assa Abloy is now expected to book SEK933 million in one-off expenses for the restructuring program for the fourth quarter.

In addition, the company said its fourth-quarter earnings will be hit by SEK80 million in one-time charges relating to the provision of supplementary lock protection in its Swedish operations.

In the third quarter, when it also faced restructuring costs, it generated a net profit of SEK709 million, down from SEK884 million a year before.

Chief Executive Johan Molin told Dow Jones Newswires that he expects Assa Abloy to report a net profit in the fourth quarter despite the new charges.

ABG Sundal Collier analyst Christer Fredriksson said the company's move appears to be a natural development in these tough economic times. The higher restructuring costs the company is now facing will be balanced long term by bigger savings, he said, adding, "the total effect should be pretty neutral."

ABG Sundal Collier rates the shares sell with a target price of SEK67.

At 1055 GMT, the shares traded down SEK0.75, or 0.9%, at SEK80.25, while the benchmark OMX index of the 40 biggest companies traded up 0.5%. Over the past 12 months, Assa Abloy's shares have fallen 29% compared with a 49% drop for the OMXN40.

 
   Company Web site: www.assaabloy.com 
 
   -By Anna Molin and Ola Kinnander; Dow Jones Newswires; [phone]; [e-mail] 
 

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