FIFE-based shopfitter Havelock Europa is set to implement a number of cost-cutting measures, including an unspecified number of job losses, in an attempt to combat increasing pressure on the company's operating margins.
At Havelock's annual meeting yesterday, chairman Norman
Lessels said orders for the first five months of this financial year were ahead of the same period in 1997.
However, margins remained under ''severe pressure'' and were unlikely to improve in the immediate future.
As a result, the company has been forced to accelerate a planned savings programme. This follows a two-year, #3m investment project in plant, equipment and information technology systems.
''We had planned to do this over a period of several months,''
said chief executive Hew Balfour. ''There are efficiency gains in terms of how much office space we occupy, and the amount of warehouse space we occupy.
''It is likely there will be an impact on employment. Some of it will be natural wastage, although not all of it.''
The company, which employs 450 of its 1000 workers in Scotland, has signed a #7.5m contract with Hays Retail Support
Services.
The three-year agreement involves the management and distribution of flatpacked and pre-assembled shopfittings from Havelock's production centres in Dalgety Bay and Nottingham.
Balfour said this was part of the cost-reduction programme, which would involve the closure of
outlying warehouses.
''We are already in the process of rationalising our warehousing and distribution space, and Hays is part of what is making that possible,'' he said.
Havelock flagged up the market difficulties in April when it released its year-end results. These showed a marginal increase in year-on-year profits, although
figures for the second six months were down.
The rationalisation programme will result in a #1.4m exceptional charge to this year's accounts. Savings are expected to be in excess of #2m annually, although only a small proportion of that will accrue in the current year.
However, Balfour was ''not despondent'' about the situation.
Havelock's only quoted competitor in the sector, Campbell & Armstrong, went into receivership earlier this week. Two other private competitors have also gone out of business since the beginning of the year, thus removing some of the excess market capacity contributing to downward pressure on prices.
''Right now we are pretty busy,'' Balfour said. ''We have a large contract with Marks & Spencer, and some of our competitors have gone out of the game, so that should enhance our competitive position.
''There has been a bit of a shake-out in that aspect, which is good for the industry although unfortunate for those involved in those companies.''
Shares in Havelock, which expects to make a ''small loss'' in the first half before delivering ''substantial profits'' in the second half, fell 16.5p to 118.5p each by the close of trading yesterday.
Lessels stepped down as chairman of the company yesterday after six years in that post and nine years serving on Havelock's board of directors. He has been replaced by director Michael Kennedy.
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