Covidien ($COV) is embarking on a cross-cutting savings plan, aiming to slash jobs, close facilities and scale up its outsourcing in an effort to save between $250 million to $300 million a year.
The move, disclosed in a regulatory filing, will rack up about $350 million to $450 million in restructuring charges, the company said, with about $100 million stemming from plant closures and the rest tied to severance and termination costs. Covidien's plan includes consolidating some manufacturing and distribution while "expanding low-cost-country sourcing," the company said.
Just how many jobs, facilities and programs will be affected remains unknown, and Covidien said in a statement Thursday that it'll provide details as decisions are made. According to the filing, the company's board has approved a broad restructuring plan and is tasking management with filling in the details, starting this year and wrapping up by 2018.
"These steps have been taken to ensure that all of our businesses are well-positioned to maximize their contribution to the long-term strength of Covidien, and to increase shareholder value," Covidien said in a statement. "The company must meet the challenge of operating as a smaller company and lowering its operating costs while still delivering the same quality products, value and service to customers around the globe."
Covidien's cost-cutting measure comes days after it forecasted humdrum sales growth for 2014, expecting an increase of between 2% and 5% in its first full year without pharma revenue. The company spun its drug business out into Mallinckrodt ($MNK) in June, and, facing a drug-free future, the med tech giant is expecting low-single-digit growth in its device business and flat sales for medical supplies.
CEO José Almeida has said Covidien is in the process of evolving its business model, a process that includes focusing on emerging markets, offering value-added services and investing in new technologies.
- read Covidien's filing
Editor's note: This story was updated to include a statement from Covidien.