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Facilitate faster decision-making to better serve the needs of clients
On January 21, 2015, UTi Worldwide committed to a plan to simplify its leadership structure and to shift management of its freight forwarding business from four geographic regions to a global leadership structure managing approximately 17 discrete geographic areas.
In connection with these actions, the Company will reduce several leadership positions and will no longer maintain regional infrastructures. Following the reorganisation, the Company will continue to have two lines of business, freight forwarding and contract logistics and distribution.
The Company will also continue to utilise the 1View freight forwarding operating system. The reorganisation is the result of a rigorous review by the Company’s new Chief Executive Officer, Edward Feitzinger, and is intended to simplify the Company’s organisational structure, to facilitate faster decision-making, to enable the Company to better serve the needs of its clients and to reduce the Company’s cost structure. The Company believes the reorganisation will enhance its ability to achieve its operational and financial goals.
In connection with the reorganisation, the Company expects to reduce a number of positions worldwide. Such headcount reductions are expected to be substantially complete by January 31, 2015, however, due to local legal requirements, some actions are expected to extend into the first quarter of fiscal 2016.
The Company expects to record charges in connection with the reorganisation relating to one-time employee termination benefits, including severance benefits and other employee expenses during Q4 of fiscal 2015. Such charges will primarily result in future cash expenditures.
At the current time the Company was unable in good faith to make a determination of the estimate of the range of expected charges.
The Company estimates that the reorganisation and other related actions will result when fully implemented in US$30.0 million to US$40.0 million of expected annual cost savings (excluding the charges incurred as a result of the reorganisation). The Company expects to complete a majority of the actions necessary to achieve the estimated cost savings before January 31, 2015, and the remainder is expected to be completed during the first quarter of fiscal 2016. The Company is in the process of determining the impact, if any, the reorganisation and related actions may have on the carrying values of certain assets and liabilities.