Operational Structure etc.
OXFORD INSTRUMENTS PLC
16 September 1999
Oxford Instruments plc announces streamlined organisation
and current trading update
Reorganisation of group businesses
Oxford Instruments plc, the advanced instrumentation group, announces a
streamlining of its organisation to accelerate the improvement in its
service offered to customers and to reduce its cost base by
approximately £4m in 2000/01 rising to around £8m per annum thereafter.
The new operational structure is expected to create substantial cost
savings for the group through the elimination of overhead costs, the
introduction of centralised purchasing and the more effective use of
synergies across the enlarged businesses, including site reductions in
the longer term. There will be around 120 redundancies in the UK. An
exceptional charge of approximately £6.5m will be taken in the current
year to cover the cost of redundancies and other reorganisation charges.
Following a detailed study carried out over the past six months with the
assistance of PricewaterhouseCoopers, the group is merging several of
its individual operations into three new businesses, each with a newly
appointed managing director reporting to the group chief executive,
Andrew Mackintosh. The businesses will be focussed on delivering an
improved level of customer service from a reduced cost base. This brings
the management structure more into line with the way group profits are
reported by business stream.
The new businesses
Oxford Instruments is forming a single magnets business incorporating
all its high magnetic field products which will be led by Steve
McQuillan who joined Oxford Instruments in October 1998 from Marconi
Instruments. These magnet products are used by government and
university research departments and by a range of industries to support
new product development.
A new instrumentation business is being created better to exploit the
group's range of measuring instruments and quality control products used
by the semiconductor and other industries. Oxford Instruments expects
to make a public announcement shortly of the appointment of an
experienced senior manager who will lead this business.
The medical instruments business will incorporate
Oxford Instruments' full range of monitoring equipment used by hospitals
and clinics. This will be led by Alan Cousens who joined the group in
August 1999 from Smiths Industries.
The group's magnetic resonance imaging joint venture with Siemens AG,
making magnets for whole body scanners, remains outside the
reorganisation. Similarly its superconducting wire business based in the
United States and used in the manufacture of magnets will remain a
separate business unit.
A new senior role of market development will be created to drive
improvements in sales effectiveness world-wide. Ron Jones, who until
now has run the very successful Microanalysis business, will take on
this role, reporting to Andrew Mackintosh.
Current trading
Before taking account of the costs and benefits of the reorganisation
being announced today, lower than expected shipments for the first few
months this year will mean that pre tax profits for the first half will
be significantly lower than for the same period last year. However the
current rate of new order intake and the order backlog indicate that the
pre-tax profit in the second half should be higher than in the
corresponding period last year. An update on the progress of the
reorganisation will be given at the time of the announcement of the
interim results in November.
Andrew Mackintosh, chief executive of Oxford Instruments plc said:
'The simplification of our operational structure will allow us to improve
our efficiency and reduce our overhead costs. It will accelerate our
business improvement programmes and maximise the synergies across the
businesses. We will be a leaner and more market-focussed organisation
which will enable us to provide an improved level of service to our
customers and a faster track for new products to reach the market place.
The disappointing current trading reinforces the need for these
changes.'
Nigel Keen, newly-appointed Chairman of Oxford Instruments plc added:
'This initiative is designed to lever more effectively the many
strengths of the group and to drive the return to shareholders back
to acceptable levels.'
For further information contact:
Andrew Mackintosh, Oxford Instruments
Tel: 01865 881437
John Rudofsky, Citigate Dewe Rogerson
Tel: 0171 638 9571
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