In Germany alone, 700 to 800 jobs are to be eliminated next year, with an equivalent number created in countries with lower labor costs, president Gerhard Pegam said.

By the end of 2003, the company aims to reduce the ratio of its workforce in high-salary states such as Austria and Germany to 30 percent from 40 percent at present, while maintaining a global staff of about 13,000 people.

Re-localisation is expected to provide 170 million euros (dollars) per year in savings, the same amount realised in the company's 2001/2001 fiscal year which ended September 30.

The announcement was made against a backdrop of fourth-quarter earnings that showed a loss including exceptional items of 64 million euros, much wider than analysts' loss expectations of 36-45 million euros.

"Even taking away the 50 million euro one-off charge, the EBIT (earnings before interest and taxes) loss was worse than expected at (a loss of) 14 million," said one dealer.

For the full year, the company reported a net loss of 38.5 million euros, compared with a profit of 148.6 million in the 2000/2001 fiscal year.

Epcos nonetheless said it sees breakeven "moving within reach" in the first quarter of its new fiscal year and forecast a "return to positive results and cash flow" in full-year 2003.

Investors were encouraged by the upbeat outlook, driving Epcos shares up 9.94 percent to 10.95 euros in afternoon Frankfurt trade, where the DAX index was 3.45-percent higher overall.

SPACE.WIRE