Xerox yesterday reported a $281 million (#319.3 million) second-quarter loss and said it would not return to profitability until the fourth quarter due to the weak global economy which affected sales to North America and Europe.
The chemical giant DuPont also reported a second-quarter loss of $213 million due to the weakened economy, the strong dollar and higher raw material costs. The company said the third quarter would be even worse - and that it would have to eliminate more jobs.
A series of disappointing earnings reports in recent days have underlined how the economic slowdown is impacting on major US companies with substantial investments in the Republic and Northern Ireland.
Xerox's performance at least met Wall Street's lowered expectations. Ms Anne Mulcahy, president and chief operating officer, said the office equipment company was ahead of schedule in meeting its target of cutting $1 billion in costs and reducing the workforce.
Last month, Xerox said 360 jobs would be lost at its Dundalk inkjet printer factory as it abandoned its small office/ home office equipment business (SOHO), which accounted for 3 per cent of revenues but was draining profits.
Asked if further job cuts were planned in Ireland, a Xerox spokesman said: "We have not been specific about where further cuts will come." He said the company had achieved 75 per cent of its cost-cutting goal and eliminated 8,600 jobs.
The scrapping of the SOHO project had the largest single impact on Dundalk, the spokesman said. "In Dundalk right now we are still continuing with the SOHO inkjet production line because we are providing supplies for at least the next two years for our customers who have products." It was continuing with all plans for other manufacturing in Dundalk, and was "not making any specific plans to do any further reductions".
Xerox has about 2,000 employees in Dundalk and 1,000 at its call centre and European support operation at Blanchardstown in Dublin. It has invested more than £300 million in its Dundalk operations and received £31 million in IDA grants.
The Stamford, Connecticut-based copying giant has been struggling for more than a year as its US inkjet printer sales fell to a 2 per cent share of the market and its share of the copier business to just over 20 per cent. The weakened economy was delaying customer purchases and the trend was not expected to turn in the third quarter, Ms Mulcahy said. "Our challenge for the second half of 2001 is driving growth in weakened economic markets" but a return to profitability "would now be delayed to the fourth quarter".
After reporting total debt of $17 billion in March, the company has been engaged on a turnaround effort that involves the sale of $2 billion in assets. It recently suspended its quarterly dividend for the first time in 53 years. Xerox now had $2.2 billion cash on hand and net debt was down $700 million from the first quarter, it said.
Second-quarter revenue was $4.1 billion, down 13 per cent from $4.7 billion in the second quarter last year due to weakened sales in North America and Europe. A 33 per cent decline in revenue in developing markets was partly due to a reconfiguration of Latin American operations, Xerox said.
For the first six months, Xerox posted a net loss of $79 million, or 13 cents per share, on revenue of $8.3 billion - compared with a loss of $47 million, or 10 cents per share, on revenue of $9.3 billion in the same period last year. The loss of 40 cents per share for the three months ending June 30th compared with a profit of $202 million, or 27 cents per share, in the second quarter last year.
The Securities and Exchange Commission has been investigating Xerox's accounting practices after the company acknowledged accounting irregularities at its Mexico unit.
DuPont reported a second-quarter loss of $213 million compared with earnings of $688 million in the period a year ago, and warned that it had not reached the bottom of the current economic downturn. "We expect conditions to continue to deteriorate into the third quarter," the Wilmington, Delaware-based company said.
The textile and fibre-making giant increased planned job cuts by 1,500 to 5,500, or 6 per cent of total staff. The contractor workforce will be cut by 1,300. Recently the company said the impact on its 800-strong workforce at the Maydown plant near Derry would be felt mainly by contractors and a few employees.
