Merck KGaA says cuts will save $385 million

Merck KGaA today put euro signs to the restructuring it announced last month, which includes some cuts to its manufacturing division.

It says it expects to save €300 million ($385 million) by 2014, after accounting for the cuts with a one-time cost of €600 million. It today forecast that revenue by 2014 will rise 4% to 8% to a range of €10.35 billion to €10.7 billion.

Last month, the company said it would close its Merck Serono headquarters in Geneva, eliminating 500 positions, and transfer another 750 to locations around the world. Like so many of its peers, Merck has said it needed to trim expenses in the face of a more difficult revenue picture.

The manufacturing operations are slated to be trimmed by 80 positions at Aubonne, Corsier-sur-Vevey and Coinsins in Switzerland. It also will shutter its manufacturing operations in Coinsins and move those functions to Aubonne. Of the 750 positions being shunted out of Geneva, 130 would be related to technical manufacturing operations and would move to the Aubonne area.

With most of the hits being taken by Merck Serono, workers there were understandably upset and had threatened to strike today. The work stoppage was nixed late yesterday, presumably when the company agreed to worker calls for further negotiations about jobs losses there. 

It is hard to see that they will be able to persuade the company to make many adjustments to the plan, since Merck KGaA says today that it expects to reap €120 million in net cost savings by 2014 from closing the Geneva R&D center. It said that in 2011, more than 80% of Merck Serono's costs were tied to R&D spending.

- read the release
- see the Reuters item

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