BIETIGHEIM-BISSINGEN (dpa-AFX) - The mechanical engineering company Dürr has cut its annual targets due to sluggish demand for woodworking machinery. The Board of Management has also announced that hundreds of jobs will be cut. Due to the cost of the job cuts, the Group's operating margin (EBIT margin) in 2023 is likely to be only 4.5 to 5.5 percent, the MDax company surprisingly announced on Tuesday evening in Bietigheim-Bissingen. Previously, the range was 5.6 to 6.6 percent. At 110 to 160 million euros, after-tax earnings are also likely to be significantly lower than previously predicted. At both ends, the management recently had 50 million euros more on the cards. The share price fell only slightly in early Wednesday trading. However, the stock has lost more than a third of its value since the turn of the year.

Dürr plans to cut almost 600 jobs worldwide at Homag, as the company announced. The subsidiary, which Dürr acquired in 2014, employs around 7500 of the almost 20,700 employees. The Board of Management expects the job cuts to initially reduce costs by ? 25 million in the coming year. From 2025, annual savings of around 50 million euros are expected. In return, costs of between 35 and 50 million euros will be incurred for the job cuts, which will already be booked in the fourth quarter.

"We have quickly worked out the roadmap for the capacity reduction at Homag and discussed it with the employee representatives," said CEO Jochen Weyrauch according to the press release. The adjustments will make the subsidiary more resilient in the long term and enable it to fully exploit its potential. During the coronavirus pandemic, business with the wood industry in particular was booming, as new kitchens, furniture and flooring were in high demand. Demand is now declining significantly.

In the first nine months, incoming orders at the Homag Group, which bundles the woodworking business, slumped by 32 percent. Dürr therefore expects the subsidiary's sales to fall by up to 15 percent in 2024. In order to limit the impact on earnings, Homag will use instruments such as the reduction of working time accounts and short-time working in addition to job cuts. In addition, an extensive hiring freeze has been imposed. The aim is to achieve an operating margin (EBIT) before special effects in the business of 2.0 to 4.0 percent in the coming year.

Meanwhile, business in Dürr's other areas is improving. Orders are increasing in business with the automotive industry as well as in environmental and balancing technology, the company said. Incoming orders fell by just under eleven percent overall in the first nine months.

Group sales, on the other hand, climbed by 7.2 percent to just under 3.3 billion euros. The company attributed this growth to factors including an improved supply chain situation and the absence of pandemic-related restrictions. Thanks to a better financial result, the bottom line showed a profit of 105.3 million euros, a good third more than in the same period last year.

Meanwhile, the forecasts for the operating margin adjusted for special effects (adjusted EBIT), order intake, sales and free cash flow remain unchanged./mne/ngu/men/stk