Canada's Acetex to 'free up' $10m through cost cutting

21 February 2002 21:38  [Source: ICIS news]

TORONTO (CNI)--Canada’s Acetex seeks to free up $10m (Euro11.5m) in extra cash through "profit improvement" to help manage a difficult first quarter in which prices for acetic acid and vinyl acetate monomer (VAM) are expected to hit the bottom of their cycle, officials said Thursday.

Brooke Wade, Acetex chairman and chief executive officer, told analysts here today that the company's "profit improvement plan" would focus on freeing up working capital through cost cuts and improvements in operations and logistics.

Said Wade: "The programme has a broad focus on cost reduction, how we do things, a large number of small things aimed at doing things better."

He emphasised that the current first quarter will be a "trough" in terms of pricing as demand remains poor on weak global economies.

First quarter prices are expected to decline by a further 4.5% for acetic acid and some 10% for VAM, Wade said.

Explained Wade: "We are hitting the bottom in terms of pricing . . . Our impression from discussions with our customers is that everybody sees that prices are as low they can go."

Citing a recent firming up of methanol prices, Wade noted: "While that (firmer methanol prices) doesn’t connect directly to our pricing, it’s a factor in our environment that shows that the general swing down seems to have ended."

Acetex has about half of its methanol feedstock requirements under fixed contract, Wade added, but declined to provide further details.

Shares of Vancouver, British Columbia-based Acetex were down 1% to Can$5/share in trading on the Toronto Stock Exchange Thursday, close to the company's 52-week low of Can$4.75/share.

By: Stefan Baumgarten
+1 713 525 2653

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