Kennametal Inc. (NYSE:KMT), a manufacturer of metal cutting tools, disclosed plans to close several facilities and reduce headcount as part of a cost-cutting initiative. The announcement was made today, following commitments from an Investor Day event held on September 8, 2023. The company aims to enhance its long-term competitiveness and achieve its strategic objectives.
The closures include a plant in Greenfield, MA, and the consolidation of two locations near Barcelona, Spain into one modern facility. The Greenfield operations are expected to cease by April 2025, with the plant's closure projected to be largely completed by December 31, 2025. The Barcelona consolidation is anticipated to be substantially complete by June 30, 2025. These actions are part of a broader strategy to shut down three to five plants by the end of Fiscal 2027.
In addition to the facility closures, Kennametal is implementing a global workforce reduction, particularly involving professional roles, to address softer market conditions, especially in the Europe, Middle East, and Africa (EMEA) region.
The company estimates that these combined measures will result in annualized pre-tax savings of around $15 million by the end of Fiscal 2025. However, the execution of these plans is expected to incur pre-tax charges of approximately $25 million, which includes about $10 million in cash-related facilities charges, roughly $10 million for severance-related cash expenditures, and approximately $5 million in non-cash facilities charges.
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