- Email: [email protected]
Global economic crisis hits Albemarle's polymer additives business in 4Q 2008
FINANCIALS
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to maintain market share and to minimize disruption to its valued customers. ‘We are very focused on aligning our assets with the demand of our customers, which is continuously moving more to the developing economies of the world’, Boyle explains. With the recent announcement of the closure of the Marshall, WV, USA plant [ADPO, January 2009], this rationalization in Europe, along with recent and ongoing expansions in Brazil, Central Europe and China, is critical to this strategic initiative, says Boyle. Columbian has also announced that agreement has been reached for minority shareholder One Equity Partners to purchase the 66.75% stake in the company held by DC Chemical Co, Ltd, of Seoul, Korea. One Equity Partners is an investment banking group owned by JPMorgan Chase & Co, and has been a minority shareholder of Columbian since 2006. Subject to customary closing conditions, including regulatory approval, One Equity will become Columbian’s sole owner during the first quarter of 2009.
Contact: Clariant International Ltd, Muttenz, Switzerland. Tel: +41 61 469 6969, Web: www.clariant.com
Contact: Columbian Chemicals Co, Marietta, GA, USA. Tel: +1 770 792 9400, Web: www.columbianchemicals.com
FINANCIALS
costs. Clariant plans to lose a further 1000 job positions – or about 5% of its current workforce – mainly in the SG&A area as a ‘first step’ to substantially decreasing personnel costs. These cuts are in addition to the approximately 2200 headcount reduction announced in 2006 and almost completed by the end of 2008 [ADPO, January 2007]. ‘The clear focus in 2009 will be on cash generation’, the company says. In line with this focus, the board is also proposing not to pay dividends, grants and other shareholder payouts for 2008. Elsewhere, Clariant Masterbatches has confirmed that the three US liquid-colour plants acquired last year [ADPO, October 2008] will continue in operation as the Rite Systems Business Unit. Ricon Colors, the granular masterbatch firm purchased at the same time as Rite, will be absorbed into the existing Clariant Masterbatches organization.
Clariant cuts production and reduces headcount
Global economic crisis hits Albemarle’s polymer additives business in 4Q 2008
wiss-headquartered Clariant has reacted to the ‘unfavourable demand development’ in 4Q 2008 by reducing production in impacted businesses and announcing a further round of job cuts. The textile, leather, automotive and construction markets experienced the largest declines in demand.
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Clariant has slowed or shut down production in the businesses that have been most impacted by deteriorating market conditions by releasing temporary workforce, reducing overtime and introducing compulsory holiday periods and short-time work. The company says it is now adapting its structures to the economic downturn by ‘decisively downsizing’ and reducing expenditure, in particular SG&A (selling, general and administration)
Quarterly net income of $13.1 million includes special items totalling $25.0 million after tax relating to the completed sale of the Port de Bouc facility in France to Azur Chimie SAS [ADPO, December 2008], restructuring costs and a oneoff tax settlement. Net income for 4Q 2007 was $58.6 million. For the full year the company’s net income was $194.2 million, down 15% from the 2007 figure of $229.7 million.
Additives for Polymers
lbemarle Corp posted record annual net sales of US$2.5 billion in 2008, up 6% compared to 2007. However, 4Q net sales of $517.7 million were down 14% compared to $599.2 million for the same period a year earlier, with the polymer additives segment showing a particularly sharp decline in both sales and operating profit.
March 2009
FINANCIALS
‘As we approached year-end, it became clear that the depth and duration of the global economic slowdown was having a greater impact than we initially anticipated’, says president and CEO Mark C. Rohr. Against this backdrop, efforts to restructure manufacturing assets and improve transactional efficiencies were accelerated, the costs of which are captured in the 4Q charges, he explains. ‘While taking immediate action to address the volume shortfall, our operating philosophy and key priorities have not changed’, says Rohr. Albemarle remains firm in its value-creation strategy, its support of R&D and its investment in innovative technologies, he says: ‘We continue to pursue aggressive actions to maintain a strong financial position, preserve the profitability of challenged operations and position our business to adapt to a changing global market’. Of Albemarle’s three business segments, Polymer Additives, Fine Chemicals and Catalysts, the global economic crisis is having the most impact on Polymer Additives, with a sharp decline in 4Q sales and operating profit. The segment recorded net sales of $148.7 million, a 36% decrease compared to the figure of $233.5 million in 4Q 2007. Net sales decreased in the flame retardants portfolio primarily due to lower volumes in brominated and mineral flame retardants caused by weakness in consumer end-markets, the company says. Operating profit for 4Q 2008 was $6.3 million, down from $31.6 million the previous year, while segment income was $5.2 million compared to $30.3 million for the same quarter in 2007. The decrease was due primarily to reduced volumes and higher raw material costs. For the full year, Polymer Additives reported net sales of $915.5 million (+1.2%), operating profit of $92.6 million (–31%) and segment income of $88.8 million (–32%). Looking ahead to 2009, Albemarle expects the recent downturn in consumer electronics, together with already lacklustre demand in the automotive and construction sectors, to impact volumes and profitability of the Polymer Additives business throughout the year. Despite the steps being taken to restructure operations and cut costs, the company says it expects 2009 will be challenging until consumer demand returns and global markets rebound. For the company as a whole, Albemarle
March 2009
is targeting $30 million in annualized savings in 2009 by accelerating cost reduction programmes and resizing its business footprint for the current economic conditions. It says it intends to maximize cash flow through working capital reduction and prudent capital spending, ‘with the goal of emerging from the current economic environment a stronger company’. Contact: Albemarle Corp, Baton Rouge, LA, USA. Tel: +1 225 388 7402, Web: www.albemarle.com
Cytec posts $350 million net loss in fourth quarter, initiates restructuring actions
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peciality chemicals firm Cytec Industries Inc reported a net loss for the fourth quarter of 2008 of US$350.7 million on net sales of $698 million. Excluding a goodwill impairment charge of $358.3 million and other special items, net earnings were $4.9 million. Net earnings for 4Q 2007 were $47.6 million on net sales of $901 million. For full-year 2008, Cytec posted a net loss of $198.8 million on sales up 4% to $3.64 billion.
‘We experienced a significant decline in sales of our chemical products caused by the unprecedented downturn in the automotive, construction and general industrial markets made worse by destocking actions taken by many of our customers at year-end’, comments Shane Fleming, Cytec’s new chairman, president and CEO. Sales volumes declined in all regions and most chemical plants ran at significantly lower operating rates than the prior-year period. In Cytec Performance Chemicals, 4Q sales decreased 17% year on year to $159 million. Selling volumes decreased by 23% as a result of global economic weakness affecting all product lines. Selling prices increased by 9% and the impact of exchange rates decreased sales by 3%. Operating earnings of $15.0 million were down compared to $16.2 million in 4Q 2007 as a result of the selling volume decline due to weak economic conditions. Earnings declines in the polymer additives and pressure-sensitive adhesives product lines were substantially offset by significantly improved 4Q
Additives for Polymers
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8
to maintain market share and to minimize disruption to its valued customers. ‘We are very focused on aligning our assets with the demand of our customers, which is continuously moving more to the developing economies of the world’, Boyle explains. With the recent announcement of the closure of the Marshall, WV, USA plant [ADPO, January 2009], this rationalization in Europe, along with recent and ongoing expansions in Brazil, Central Europe and China, is critical to this strategic initiative, says Boyle. Columbian has also announced that agreement has been reached for minority shareholder One Equity Partners to purchase the 66.75% stake in the company held by DC Chemical Co, Ltd, of Seoul, Korea. One Equity Partners is an investment banking group owned by JPMorgan Chase & Co, and has been a minority shareholder of Columbian since 2006. Subject to customary closing conditions, including regulatory approval, One Equity will become Columbian’s sole owner during the first quarter of 2009.
Contact: Clariant International Ltd, Muttenz, Switzerland. Tel: +41 61 469 6969, Web: www.clariant.com
Contact: Columbian Chemicals Co, Marietta, GA, USA. Tel: +1 770 792 9400, Web: www.columbianchemicals.com
FINANCIALS
costs. Clariant plans to lose a further 1000 job positions – or about 5% of its current workforce – mainly in the SG&A area as a ‘first step’ to substantially decreasing personnel costs. These cuts are in addition to the approximately 2200 headcount reduction announced in 2006 and almost completed by the end of 2008 [ADPO, January 2007]. ‘The clear focus in 2009 will be on cash generation’, the company says. In line with this focus, the board is also proposing not to pay dividends, grants and other shareholder payouts for 2008. Elsewhere, Clariant Masterbatches has confirmed that the three US liquid-colour plants acquired last year [ADPO, October 2008] will continue in operation as the Rite Systems Business Unit. Ricon Colors, the granular masterbatch firm purchased at the same time as Rite, will be absorbed into the existing Clariant Masterbatches organization.
Clariant cuts production and reduces headcount
Global economic crisis hits Albemarle’s polymer additives business in 4Q 2008
wiss-headquartered Clariant has reacted to the ‘unfavourable demand development’ in 4Q 2008 by reducing production in impacted businesses and announcing a further round of job cuts. The textile, leather, automotive and construction markets experienced the largest declines in demand.
S
A
Clariant has slowed or shut down production in the businesses that have been most impacted by deteriorating market conditions by releasing temporary workforce, reducing overtime and introducing compulsory holiday periods and short-time work. The company says it is now adapting its structures to the economic downturn by ‘decisively downsizing’ and reducing expenditure, in particular SG&A (selling, general and administration)
Quarterly net income of $13.1 million includes special items totalling $25.0 million after tax relating to the completed sale of the Port de Bouc facility in France to Azur Chimie SAS [ADPO, December 2008], restructuring costs and a oneoff tax settlement. Net income for 4Q 2007 was $58.6 million. For the full year the company’s net income was $194.2 million, down 15% from the 2007 figure of $229.7 million.
Additives for Polymers
lbemarle Corp posted record annual net sales of US$2.5 billion in 2008, up 6% compared to 2007. However, 4Q net sales of $517.7 million were down 14% compared to $599.2 million for the same period a year earlier, with the polymer additives segment showing a particularly sharp decline in both sales and operating profit.
March 2009
FINANCIALS
‘As we approached year-end, it became clear that the depth and duration of the global economic slowdown was having a greater impact than we initially anticipated’, says president and CEO Mark C. Rohr. Against this backdrop, efforts to restructure manufacturing assets and improve transactional efficiencies were accelerated, the costs of which are captured in the 4Q charges, he explains. ‘While taking immediate action to address the volume shortfall, our operating philosophy and key priorities have not changed’, says Rohr. Albemarle remains firm in its value-creation strategy, its support of R&D and its investment in innovative technologies, he says: ‘We continue to pursue aggressive actions to maintain a strong financial position, preserve the profitability of challenged operations and position our business to adapt to a changing global market’. Of Albemarle’s three business segments, Polymer Additives, Fine Chemicals and Catalysts, the global economic crisis is having the most impact on Polymer Additives, with a sharp decline in 4Q sales and operating profit. The segment recorded net sales of $148.7 million, a 36% decrease compared to the figure of $233.5 million in 4Q 2007. Net sales decreased in the flame retardants portfolio primarily due to lower volumes in brominated and mineral flame retardants caused by weakness in consumer end-markets, the company says. Operating profit for 4Q 2008 was $6.3 million, down from $31.6 million the previous year, while segment income was $5.2 million compared to $30.3 million for the same quarter in 2007. The decrease was due primarily to reduced volumes and higher raw material costs. For the full year, Polymer Additives reported net sales of $915.5 million (+1.2%), operating profit of $92.6 million (–31%) and segment income of $88.8 million (–32%). Looking ahead to 2009, Albemarle expects the recent downturn in consumer electronics, together with already lacklustre demand in the automotive and construction sectors, to impact volumes and profitability of the Polymer Additives business throughout the year. Despite the steps being taken to restructure operations and cut costs, the company says it expects 2009 will be challenging until consumer demand returns and global markets rebound. For the company as a whole, Albemarle
March 2009
is targeting $30 million in annualized savings in 2009 by accelerating cost reduction programmes and resizing its business footprint for the current economic conditions. It says it intends to maximize cash flow through working capital reduction and prudent capital spending, ‘with the goal of emerging from the current economic environment a stronger company’. Contact: Albemarle Corp, Baton Rouge, LA, USA. Tel: +1 225 388 7402, Web: www.albemarle.com
Cytec posts $350 million net loss in fourth quarter, initiates restructuring actions
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peciality chemicals firm Cytec Industries Inc reported a net loss for the fourth quarter of 2008 of US$350.7 million on net sales of $698 million. Excluding a goodwill impairment charge of $358.3 million and other special items, net earnings were $4.9 million. Net earnings for 4Q 2007 were $47.6 million on net sales of $901 million. For full-year 2008, Cytec posted a net loss of $198.8 million on sales up 4% to $3.64 billion.
‘We experienced a significant decline in sales of our chemical products caused by the unprecedented downturn in the automotive, construction and general industrial markets made worse by destocking actions taken by many of our customers at year-end’, comments Shane Fleming, Cytec’s new chairman, president and CEO. Sales volumes declined in all regions and most chemical plants ran at significantly lower operating rates than the prior-year period. In Cytec Performance Chemicals, 4Q sales decreased 17% year on year to $159 million. Selling volumes decreased by 23% as a result of global economic weakness affecting all product lines. Selling prices increased by 9% and the impact of exchange rates decreased sales by 3%. Operating earnings of $15.0 million were down compared to $16.2 million in 4Q 2007 as a result of the selling volume decline due to weak economic conditions. Earnings declines in the polymer additives and pressure-sensitive adhesives product lines were substantially offset by significantly improved 4Q
Additives for Polymers
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