Gehl Discontinues Agricultural Product Lines
Gehl Co., West Bend, Wis., announced it plans to discontinue its agricultural implement product lines, including hay tools, feedmaking, and forage harvesting equipment. Manufacturing operations will wind down over the next 60 days. Approximately 140 employees outside of Gehl's corporate headquarters will be affected by this action.
Gehl's decision to discontinue the agricultural implement product lines is a response to the ongoing reduction of the company's traditional dairy farmer customer based and the resulting decline sales and earnings with those products.
“Although we are eliminating our agricultural implement product lines, we remain fully committed to our agricultural equipment dealers and customers through our continuing supply of compact equipment and ongoing parts and service support for the ag implement product lines,” said William D. Gehl, chairman and chief executive officer. “We have been proactive by introducing a new expanded line of skid loaders … along with track loaders, compact excavators, all-wheel steer loaders, and the CT Series telescopic handlers, which are all well-suited for the agricultural customer of today and tomorrow. The evolution of our business focus on the growing market for compact equipment is evidenced by the fact that over 90 percent of our 2005 sales were compact equipment-related.”
Discontinuing the agricultural products is expected to result in an after-tax charge of approximately $9.5 million, or $0.76 per fully diluted share, to Gehl's 2006 earnings. These charges include an $8.1 million non-cash asset impairment charge related to inventory and fixed assets and a $1.4 million cash charge related to severance and other employee costs.
Gehl now expects 2006 net sales from continuing operations to range from $485 million to $495 million and earnings per fully diluted share from continuing operations of $2.20 to $2.30.