Kemet cuts 640 jobs as losses mount

Some 200 employees will be affected in the Kemet's US operations, with the balance at various facilities within Europe, Mexico, and Asia.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 7/30/2008

Kemet Corp will reduce its salaried workforce by 12% as the maker of surface-mount and through-hole capacitors looks to cut support costs after losses grew from $20.5 million in the March quarter to more than $187 million in the June quarter..

The job cuts will impact approximately 640 employees and are expected to lower Kemet’s support costs by approximately $24 million in the remainder of the current fiscal year or approximately $36 million on a full-year basis. The layoffs will accrue a severance expense of approximately $20 million, primarily in the September quarter. Some 200 employees will be affected in the Kemet’s US operations, with the balance at various facilities within Europe, Mexico, and Asia, the company said.

"It is imperative that we match our support costs to the condition of our current market environment," said Per Loof, Kemet’s CEO, in a statement this morning. “The actions we are taking today are painful and difficult for the Kemet family. However, we must minimize our costs at the support level while maintaining world-class service, product innovation, and quality to successfully compete in our market and reach our goals. We are fully committed to executing our strategies, which are designed to return Kemet to profitability and create shareholder value.”

The Greenville, SC-based company separately today announced results for its fiscal Q1 2009, ended June 30, with revenue of $242.8 million up less than 1% sequentially and a net loss of $187.3 million that compared to Kemet’s March quarter loss of $20.5 million.

“The financial results for this quarter are below our expectations and are disappointing,” Loof said in Kemet’s financial statement. “Revenue increased slightly this quarter over our last quarter, but rising energy costs, pricing pressure in our Asian markets, and general weakening economic conditions set up a difficult environment to take advantage of the positive revenue increase.”

In a third statement today, Kemet announced it has entered into a new medium-term credit facility in the principal amount of $148 million (95 million Euro) with UniCredit Corporate Banking, a financial institution headquartered in Italy. Kemet announced in June that it had received a commitment letter from UniCredit for this facility. Closing is expected before the end of August.