Detection Technology - Initiates change negotiations
As a part of its cost-saving program, DT today initiated change negotiations which may end up in a termination of a maximum of 9 employments and changes in roles. In addition, other measures to improve cost efficiency will be taken in all of the company’s operations.
- In its Q2 report, DT already announced that cost savings are made to meet its 15% EBITA margin target in 2024. Today the company announced change negotiations concerning 95 senior salaried employees in Finland. In total, the measures that may be implemented after the change negotiations could lead to a termination of a maximum of 9 employments and changes in job roles.
- DT has already taken small measures that have decreased its fixed costs to some extent and will continue to improve its efficiency globally. For example, the company shut down its talent hub organization in Nanjing, China which consisted of personnel of less than five.
- Forementioned measures are estimated to continue until the end of Sep 2023. Thus, the impact could be visible already in Q4. However, the termination of employment likely includes extra one-time costs of which P&L recognition schedule is yet unsure.
- In our last update on the 4th of Aug, we already counted some cost savings in our estimates, starting from Q3, but increasingly in Q4 and 2024. In our estimations, the departure of nine senior salaried persons could end up in savings of over EUR 1m in personnel costs on a year basis. However, the acquisition of Haobo Imaging, salary inflation, and the extent of savings in other operative costs mix the equation and the net impact on fixed costs is difficult to estimate.
- However, we view the news as positive, but not expect DT reaching its EBITA margin target of 15% yet in 2024. Before relying on the company's medium-term target, we need more evidence on the success of saving-program as the company's profit performance has lagged during the past few years.
- At this point, we do not make any changes to our estimates.