08/09/2012 09:54 EDT | Updated 10/09/2012 05:12 EDT

GLV to cut European workforce amid restructuring of water treatment business

MONTREAL - GLV Inc. is cutting its global workforce for the second time this year as it sheds another 10 per cent of employees at its Ovivo water treatment business as it restructures in a bid to restore profitability.

The Montreal-based industrial equipment company has about 2,200 employees. It will shed 120 to 135 employees mostly in Europe in the coming two quarters. Very few people will be affected in Canada, said chief financial officer France De Blois.

GLV (TSX:GLV.A) cut about 20 employees in March ahead of a corporate restructuring of its senior management announced in June.

"We are confident that this repositioning of Ovivo will spearhead a return to sustained and more predictable profitability for the group," GLV president and CEO Richard Verreault said during a conference call.

The company estimated it will be able to reduce annual costs by about $8 million as a result of the cuts, which will cost about $4 million in severance and other expenses.

The restructuring will position Ovivo to focus on several key industries in North America, Europe, the Middle East and Africa and see the creation of regional hubs in Britain, Germany, Switzerland and the United States.

The changes will cut $50 million in annual revenues, but increase profits.

The company now expects revenues will be $600 million to $650 million for its 2013 financial year, down from its previous forecast of $620 million to $670 million.

In its latest quarterly report Thursday, GLV said it lost $5.5 million or 13 cents per share on $147.5 million of revenue. That compared with a $4.1-million loss or nine cents per share in the year-earlier period on $150.4 million of revenue.

GLV said the bigger loss was mainly due to the impact of a foreign exchange loss and a higher income tax charge.

Analysts had expected a loss of two cents per share.

The company said mixed results at Ovivo during the quarter were partially offset by good performance at its pulp and paper group.

However, the pulp and paper group's order backlog at the end of June was down from March 31, when the company's 2012 financial year ended, while Ovivo's backlog increased.

At June 30, the company's total order backlog stood at $343.3 million, down from $354.8 million at the end of March.

Pierre Lacroix of Desjardins Capital Markets said he has confidence in GLV as it continues to be in transition mode.

"We continue to believe in GLV’s ability to deliver gradual improvement in the coming quarters, which should support the stock in the coming months," he wrote in a report.

On the Toronto Stock Exchange, its shares closed unchanged Thursday at $1.85.