Network Testing: Swift implementation of investment program aimed at substantially improving profitability
Ascom is swiftly implementing the investment program announced for the Network Testing Division. A reorganization of the division, growth initiatives and restructuring measures have been launched to improve operational performance. The move is aimed at substantially improving profitability as well as achieving growth in the Network Testing Division. Both will contribute to reach the communicated target of an EBITDA margin of 14-15% at Group level in 2013.
Ascom had announced plans at the 2012 annual media conference to launch after the immediate actions already implemented additional comprehensive measures. The additional measures aim to align the Network Testing business to the changed market environment, achieve a substantial improvement in profitability before restructuring costs, and to enable growth of the division. Thus the investment program "Enterprise" was set up broadly and consists of three parts: reorganization of the division, growth initiatives, and restructuring measures.
The Network Testing Division is being streamlined and reorganized. The existing functional organization will be replaced and the market-facing part of the division is being split into three regional business units: America, EMEA (Europe, Middle East, and Africa) and APAC (Asia, Pacific), each with individual budget responsibility and direct management of their respective regions. The regional units enable the division to be closer to its customers and better serve their needs. In a further move to enable greater flexibility, the product development part of Network Testing is being divided into three distinct product units: "Test & Measurement", "Benchmarking & Monitoring" and "Reporting & Analysis", each with its own budget accountability. The heads of the three regional business units, as well as those of the three product units will report directly to Rikard Lundqvist, General Manager of Ascom Network Testing.
In parallel targeted growth initiatives for the Network Testing Division are being implemented. Specifically, sales activities in the Reporting & Analysis product area (which was substantially strengthened by the acquisition of Veelong in December 2011), as well as in Western Europe, are to be stepped up.
Implementation of the restructuring initiatives will result in the net loss of around 70 jobs worldwide in the Network Testing Division, with all sites being affected. In addition, around 30 jobs of independent external contractors will be canceled. The details of the restructuring will be discussed beforehand with the employee organizations in each location.
Two experienced international managers have been appointed with a view to strengthening the division's management. David Brown, Vice President EMEA, will oversee the Europe/Middle East/Africa regional unit, while John Passauer has been appointed as the new divisional Vice President Finance replacing the current one whose assignment will come to an end as planned. In addition, James Morrison is the project leader for implementing the "Enterprise" investment program.
Implementation of the "Enterprise" measures will involve total one-time costs of around CHF 10 million, of which about one third will not affect cash. The measures will reduce the Network Testing Division's annual costs by around CHF 15 million. The "Enterprise" program will generate net savings already in 2012. In addition, the restructuring costs will be compensated by the book profit from the divestment of the Defense business unit on Group profit level.
The targeted improvement in Network Testing's profitability will be an essential contribution to enabling the Group to achieve its goal of an EBITDA margin of 14-15% in 2013.
Ascom is a global solutions provider with comprehensive technological know-how in mission-critical wireless communication. The company focuses on the areas of Wireless Solutions (high-value, customer-specific communications solutions) and Network Testing (a global market leader in testing and optimization solutions for mobile networks) division. Ascom Group is headquartered in Switzerland, has subsidiaries in 17 countries, business activities in more than 130 countries, and employs around 1,600 people worldwide. Ascom registered shares (ASCN) are listed on the SIX Swiss Exchange in Zurich.
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