Zoko Enterprises Ltd. (TASE:ZOKO), n importer of Caterpillar (NYSE:CAT) heavy equipment, fired 100 employees in recent months, a fifth of its workforce. After several years of high profits, Zoko, which mainly operates in the earthworks industry, posted an unexpected loss of NIS 1.7 million for 2004, compared with a profit of NIS 13.4 million for 2003.
All the items in Zoko's financial report were worse, except for revenue. One the main reasons for the deterioration was inaccurate projections about trends in the company's industry.
Zoko, controlled by Bernard Schreier, reports that between the end of 2003 and early August 2004, the company had increased its workforce in expectations of higher sales, which were not realized. Zoko hired 40 people during this period, and added another 90 through the acquisition of Oz Hydraulics and Pneumatics Ltd.
The unrealized sales projections caused Zoko to reassess its situation in August 2004. Accordingly, the company launched a streamlining plan to cut its cost structure and adjust it to its activities. The reduction many involved lay-offs.
Zoko CFO Shail Gilad said, "The year began in line with expectations, and the first quarter was in line with optimistic projections. The earthworks market took a turn for the worse in June: less work, and less equipment. The market simply contracted, and Zoko shrank with it."
Published by Globes [online], Israel business news - www.globes.co.il - on April 10, 2005