In Focus no. 44 equity analyst Bjørn Schwarz, Sydbank Markets, gives examples of the development in restructuring costs of chosen companies and what the investors can learn from them. The restructuring measures have typically involved staff reductions and closing down of production facilities, which may be comprised under the designation capacity adjustments.
The companies' budgeted restructurings are seldomly enough since it is difficult to predict the magnitude of the restructuring costs and the time frame for the restructuring process. Moreover, transparency is reduced and it will be more difficult for the investors to follow the underlying operation of the companies. The IT and telecom sector followed by the industrial sector and banking industry have been hit hard by restructurings.
Consequently, investors should increasingly focus attention on the bottom line and the operational cash flow of companies that are in the process of restructuring, whereas the development in operations and pro forma statements should be interpreted with caution.
Read the entire article "Business restructurings - what have we learned?" in Focus no. 44 by clicking here .
