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Itron Takes Business to Moldova

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Itron, Inc. (ITRI) has entered into an agreement to install around 11,000 advanced residential water meters for the customers of Floresti, Moldova, through the water utility service, Servicii Comunale Floresti. The water meter technology will be installed over a period of six months starting from the end of fiscal 2012.

The advanced residential water meters will be endowed with communication modules along with a fixed network infrastructure. All the aging meters of the Floresti will be replaced with Itron’s more advanced version of water meters and installed at the company’s new subscribers’ homes.
The fixed network of water meters will transmit the consumption data. The automation of the meter reading process will be efficient enough to help in trimming down operational costs.

With this new deal, Itron seizes the opportunities to explore the high potential of the emerging markets of Moldova; alongside, the contract will also open up more vistas for the company both to explore and win new deals in the potential markets in the counties of Eastern Europe. The deal will thus benefit the company in expanding its water metering portfolio.

Earlier in June, Itron partnered with Australia’s largest water utility, Sydney Water, to replace old meters with Itron’s high efficiency ones. Henceforth, the residential and commercial customers of Sydney Water in Sydney will be served with Itron’s water meters for the next three years.

Itron has decided to restructure its manufacturing operations for increasing efficiency and lowering manufacturing cost. Itron also has plans to curtail global workforce by 7.5%. The company expects annualized cost savings of $15 million in 2012; its savings are projected to grow to $30 million in 2013.

However, Itron will have to incur pre-tax restructuring charges in the range of $75-$80 million; of which it expects to pay a considerable portion throughout 2012 and the first half of 2013. Therefore, operating expenses will increase, creating margin headwinds in 2012 and first half of 2013.

Itron faces tough competition from Badger Meter, Inc. (BMI) and General Electric Company (GE). The company retains a short-term Zacks #3 Rank (Hold). We have a long-term Neutral recommendation on the stock.

Based in Liberty Lake, Washington, Itron Inc. is one of the principal technology providers to the energy and water industries worldwide. It produces electricity, gas, water, and heat meters, data collection and utility software solutions along with various other associated metering products for residential, commercial and industrial and transmission and distribution customers. It has two reportable segments: Energy and Water.

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