Imtech cuts jobs, takes more charges on German business
Imtech said it would cut 1,300 jobs, or about 4.5 percent of its global headcount, and make more writedowns on its German operations, in a sign of escalating trouble at the Dutch engineering company.
Total costs related to financial irregularities still being investigated in Germany and Poland rose by 70 million to 370 million euros ($482 million), Imtech said in a trading update about the problems, which forced it to postpone its results.
Shares fell 7 percent in Amsterdam on Tuesday.
Imtech said most job cuts would be in Germany and the Netherlands, with about a 10 percent reduction in staff numbers.
It said it would take a one-time charge of 80 million euros for the restructuring, which chief executive Gerard van de Aast said would bring financial benefits in 2013 and 2014.
Imtech surprised markets in February when it replaced its chief financial officer, canceled dividend payments, dropped sales targets and postponed the release of its earnings just a day before their scheduled publication.
It also launched an emergency cash call of 500 million euros and said it would write down 300 million euros on German and Polish projects after discovering irregularities.
Brokerage KBC Securities on Tuesday downgraded Imtech to sell, and cut its price target to 8 euros from 12.5 euros.
"In hindsight, we should have done this immediately in February when the house started to collapse. Whether we were naive or foolish, we leave that up to our readers," it wrote.
Imtech's financial future is hard to forecast, the brokerage added, due to an unpredictable market in the Netherlands and limited visibility for the troubled German business.
In Germany, the writedowns cover improperly booked trade receivables, the wrongful postponement of project losses and lower estimates for work in progress.
In Poland, they relate to three construction projects at Adventure World Warsaw and a biomass power plant, also in the capital. They have a combined value of 757 million euros.
The full extent of the damage will become clearer in coming weeks when investigations are expected to be completed. The findings will be released in early June, along with the delayed earnings report for 2012, the company said.
Van de Aast said some of the problems in Germany appeared to date back to 2011 and may prompt a restatement of earnings for "several years."
"We have found that a part of the damage was earlier than 2012 and we will give fuller insight and the extent of the various amounts at the release of the annual results," he said.
Van de Aast said the irregularities could also lead to the prosecution of former staff. He did not name individuals and said a decision about pressing charges would only be made after investigations were completed.
Imtech said on Tuesday it was increasing the German writedowns by 70 million euros to 220 million euros, while those in Poland were unchanged at 150 million euros.
Imtech's former group chief financial officer, Boudewijn Gerner, and two top executives for its German operations, who were responsible for the Polish business, have stepped down.
Chief financial officer Hans Turkesteen said the company was insured against such damages, but the size of a possible claim was still unclear.
($1 = 0.7674 euros)
(Reporting By Anthony Deutsch; Editing by Sara Webb and Helen Massy-Beresford)