Nearly 300 People To Be Cut From Consumer And Commercial Drone Production

The fourth quarter financial report from Parrot, makers of the BeBop drone, was pretty grim. The company reported that at the end of the fourth quarter of 2016, Parrot is reporting revenues of around 85 million euros (approx. $90 million), coming in below its target of around 100 million euros (approx. $105.5 million) announced at the end of November.

Drones generated revenues of around 60 million euros (approx. $63.3 million), with approximately 11 million euros (approx. $11.6 million) for commercial drones and 49 million euros (approx. $51.7 million) for consumer drones.

The commercial performance for consumer drones in the fourth quarter was achieved based on margins that would be insufficient to deliver profitable growth for this business over the medium and long term.

The Group has set itself a priority to rapidly meet this challenge with a strategy to rebalance its finances.

Parrot has taken on board the changes in market for consumer drones and considers that the management of its development in this segment will involve an adaptation of its offer and a cost reduction phase. The action plan mapped out aims to adapt the level of resources deployed in line with the level of business achieved in 2016, focusing on four key areas:

• Focusing the capacity for innovation on a reduced number of products with a commitment to taking a significant technological step forward;
• Redeploying the product offering, capitalizing in particular on the expertise built up in commercial drones;
• Realigning sales and marketing resources around the most profitable distribution channels and most promising markets;
• Adjusting the support teams to the level of business.

Consulting with its employee representatives, and following the legal framework applicable, Parrot is therefore envisaging a plan that could reduce its workforce by around 290 people out of a total of 840 staff currently working in the Group’s Drone activities. These reductions would concern employees both in France and internationally. In France, this proposal would result in around 150 positions being made redundant, taking into account in particular possible redeployments in the Group's other activities.

The overall cost of this transition is estimated at around 45 million euros (approx. $47.5 million), including 20 million euros (approx. $21.1 million) of asset writedowns, which will be provided for in the accounts for 2016.

(Source: Parrot news release)

FMI: https://corporate.parrot.com