Heavy earthmoving equipment company Emeco Holdings is pulling out of Europe as a result of “continued underperformance.”
The firm will also consolidate its US operations with its Canadian business under a single North American banner.
According to the company, the decision was made after the determining the European operations were unlikely to meet the required rate of return in the foreseeable future.
“A presence in Europe offered no material advantage in terms of Emeco’s international procurement activities,” the company said.
“The closure of the European business will result in restructuring charges of up to $9.5 million being incurred in the second half of 2010.”
Emeco’s facilities in London, Kentucky and Houston, Texas will be closed and any equipment will be sold or relocated to offices in Canada.
“The fundamentals of the Appalachian coal market do not support an ongoing presence by Emeco in this region,” the company’s chief executive Keith Gordon said.
“The long term outlook is for a steady decline in coal production in the region and customer support for the rental model is unlikely to be sustainable in the medium term.”
The restructure will cost the company around $20 million.
The company also provided a net profit guidance of between $40 million and $44 million and expects an operating net profit of about $13.5 million for the six months to December.
“The operating environment in the first half has been challenging, but we are seeing strong signs of recovery in our market,” Gordon said.
“Although a number of new mining projects that will provide revenue for Emeco have incurred short term delays, momentum has been building towards the end of the half.”