Cubic Corp. [CUB] on Wednesday said it combined its defense operations into one new segment as part of a new profitability initiative designed to achieve millions of dollars in annual savings beginning in fiscal year 2016.
The realignment of the defense businesses consists of consolidating the Defense Systems and Mission Support Services segments into the new Cubic Global Defense (CGD) segment, which will be led by former Mission Support Services President William Toti.
The realignment is part of Cubic’s “One Cubic” initiatives, which are designed to yield between $15 million and $16 million in annualized savings beginning in FY ‘16. In addition consolidating its defense operations, Cubic said it will consolidate its segment and corporate support functions for manufacturing, supply chain, finance, human resources and information technology (IT) worldwide.
Cubic said the initiatives will result in a $6 million pre-tax charge for the second quarter of its FY ’15, but forecasts that the overall impact for the year will be neutral due to expected cost savings.
The restructurings will result in a less than 2 percent reduction to its global workforce, which will be completed by the start of the FY ’15 third quarter, Cubic said.
GCD has about $800 million in annual sales and operates through six business units and more than 5,500 employees. The company’s defense business is focused on live, virtual and constructive training, special operations and security communications for C4ISR, and national security programs.
“The organizational realignment strengthens our competitive position, enhances collaboration and eliminates redundant costs,” Toti said in a statement. “By combining the expertise previously available in two separate operating companies, we can now deliver higher quality to our customers in a more efficient manner and we can pursue larger opportunities by leveraging significant past performance and technology credentials resident in the company.”
Cubic also has a Transportation Systems segment.