Meritor to Cut Global Salaried Workers on Coronavirus Scare
Meritor, Inc. MTOR recently announced a restructuring plan to boost the firm’s cash position to counter the rising uncertainties related to the coronavirus crisis.
The company is expected to slash the global headcount of salaried workers by 8% in a bid to reduce labour expenses and eliminate certain hourly jobs. Additionally, Meritor predicts declines in most global truck and trailer market volumes for the third quarter of fiscal 2020. The firm also anticipates to incur $25 million in employee-severance expenses across its Commercial Truck & Trailer, and Aftermarket & Manufacturing segments. Restructuring actions aligned with this plan are likely to be complete by the end of fiscal 2020.
Furthermore, the company has agreed to restore the minimum salary for its salaried workers in the United States and Canada, as well as decided to increase the retainer fees paid to non-employee directors and the base salaries of its officers. While reductions in pay for salaried employees, currently 20-25% of the base pay, will be reduced to 10-15%, the current reduction in retainer fees for non-employee directors of 60% will be reduced to 20%. Moreover, executive and management compensation has been partially restored but remain reduced from the original levels, including a 20% pay cut for the CEO and president, and a 15% cut for vice presidents and other officers, during the crisis.
Meanwhile, Meritor has reaffirmed the guidance for the fiscal third quarter. The firm expects revenues of $400-$500 million and cash flow from operations to lie in the band of negative $150-negative $225 million in the next quarter.
Zacks Rank & Stocks to Consider
Meritor currently carries a Zacks Rank #3 (Hold). Shares of Meritor have depreciated 19%, year to date, compared with the industry’s decline of 14%.
Some better-ranked stocks in the same sector are Tesla, Inc. TSLA, Niu Technologies NIU and Halfords Group Plc HLFDY, each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Tesla have appreciated 110.7%, year to date, compared with its industry’s rise of 28.9%.
Shares of Niu have gained 25.2%, year to date, as against the industry’s decline of 14%.
Shares of Halfords have rallied 44.2%, year to date, as against its industry’s decline of 13.9%.
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Meritor, Inc. (MTOR) : Free Stock Analysis Report
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