Agfa to cut 4,000 jobs

September 27, 2001 Posted: 0901 GMT

LONDON (CNN) -- Belgian photographic group Agfa said on Thursday it would slash 4,000 jobs, or about one-fifth of its workforce, to increase profitability.

"A one time estimated restructuring cost of 550 million ($506 million), which could be equivalent to a reduction of 4,000 jobs, will be spread over the years 2001-2002," Agfa said.

Agfa blamed increased competition and an "acceleration" towards digital technology from traditional analogue equipment. The company announced in June plans to reorganize it business after issuing two profit warnings.

Film and photography companies have been struggling with the adjustment to a shift to digital photography as the market for traditional film continues to shrink.

Eastman Kodak (EK: Research, Estimates) last week announced plans to eliminate jobs and lowered its third-quarter earnings estimates. The world's largest maker of photographic products is struggling with lower sales in the face of a sluggish economy and terrorist attacks on the United States.

Agfa, which receives about 30 percent of sales from consumer products, like film, photographic paper, digital cameras, scanners, and from equipment for photofinishers and labs, said it was seeking to cut operational costs by 550 million and working capital by 500 million by 2003.

Last month, the company said restructuring costs were expected to push its net profits lower in 2001, although it forecast profit margins would be restored from 2002. It also warned that 2001 operating profit would drop by 35 percent -- greater than analysts' expectations, Reuters said.

Agfa stock, which has more than halved from a peak of 26.51 in January, rose 5.7 percent to 13.00. The stock hit a record low of 11.00 on September 21. German drug and chemicals company Bayer (FBAY), which owns 30 percent of Agfa, slipped 0.7 percent to 28.94 in early Frankfurt trade.

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