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ST. PETERSBURG - Cost-cutting measures elsewhere at Danka Business Systems PLC will be a positive for the company's U.S. headquarters in St. Petersburg.
At Danka's annual meeting Friday in London, the distributor of photocopiers and fax machines said it will eliminate about 675 jobs worldwide and consolidate real estate, primarily in the United States and United Kingdom. The moves will boost Danka's presence locally, however, with the addition of more than 100 employees.
"We'll be consolidating some operations into St. Petersburg, resulting in a 10 to 12 percent increase in workers there," said Donald Thurman, Danka's chief strategy and marketing officer. "Those jobs will come from the Colorado and Chicago area, though we haven't talked to those employees yet."
Other areas affected by the job cuts will be Danka's operations in the United Kingdom, Italy, Spain, Germany, Canada, Mexico, Puerto Rico and Brazil.
Thurman said the new jobs in St. Petersburg, which will bring the local work force to about 1,000, will be in customer support and dispatch and contract renewal, as well as managerial positions. He expected only a small number of jobs would be filled through transfers, with the rest local hires.
Thurman also said Danka's plan to shed real estate globally will have no further impact in St. Petersburg. A year ago, the company consolidated its local operations, which consisted of six buildings on and near Roosevelt Boulevard N. After sales and lease-back arrangements, Danka now occupies three buildings in St. Petersburg; one other building is available for sublet. Danka's reconfigured campus includes a new digital solutions center, used to support the growing number of Danka customers with digital copiers and printers.
Danka, which has been struggling to regain profitability, said the cost-cutting measures would result in annual savings of $40-million to $45-million, more than previously expected. To account for employee severance and costs related to the real estate changes, the company expects to take a charge of $25-million to $35-million primarily in the quarters ending Dec. 31, 2003 and March 31, 2004.
For the quarter ended Sept. 30, Danka had reported a net loss of $17.3-million on revenues of $323-million, compared with net earnings of $1.8-million in the year-ago quarter on revenues of $343.8-million a year ago.
Lang Lowrey, Danka's chairman and chief executive, said the restructuring will help the company improve operating margins in fiscal 2005.
"In recent years, Danka has had a high cost structure, partly due to our acquisition legacy and the resulting, extensive analog machine population," Lowrey said.
"Our equipment population is now approximately 50 percent digital, which means we are approaching the point where we should begin to see growth and reverse the revenue declines we have been experiencing these past five years."
Danka's shares closed Friday at $3.73, up 53 cents.
- Kris Hundley can be reached at hundley@sptimes.com or 727892-2996.