Celanese hints at more Ticona plant closures in US

29 July 2003 18:11  [Source: ICIS news]

Lyndon Cole

LONDON (CNI)--Restructuring plans by German industrial chemicals company Celanese for its engineering plastics business Ticona could involve the closure of more manufacturing capacity, it was hinted on Tuesday.

Lyndon Cole, president of Ticona, said at an analysts' conference on the group's second quarter results that plans to cut costs and improve margins would involve "manufacturing optimisation" in Europe and North America.

Ticona recently announced plans to shut its Summit, New Jersey facility and has just closed its Telford, England plant. The Telford plant had a manufacturing capacity of 14 000 tonne/year and mostly produced compounded polyester products for the European market. The plant had compounded polymers shipped in from Kelsterbach in Germany.

Cole cited this as an example of the inefficiencies which Ticona is seeking to eliminate elsewhere in the business. He hinted that the company's four remaining wholly-owned sites in North America could be affected. In addition to the Fortron joint venture facility with Japan's Kureha, Ticona has US manufacturing and/or compounding plants at Bishop, Texas, Shelby in North Carolina, Florence in Kentucky, and Winona in Minnesota. 

He stressed that moves to increase productivity and efficiency at Ticona were "more an optimisation of a very good franchise rather than turning around a business that is troubled".

Cole said Ticona had good overall growth prospects with leading positions in several key products.

Earlier today, Celanese warned of a probable decline in group H2 earnings due to planned expenditure on restructuring over the next several quarters at Ticona. Celanese chief financial officer (CFO) Perry Premdas told analysts that the group expected to take a special charge of up to about Euro20m ($23m) this year in restructuring costs at Ticona. Benefits from these measures are expected to begin in 2004. 

Plans by Celanese to source Trinidad-produced methanol from US-based Southern Chemical Corp (SCC) beginning in 2005 could also herald the possible closure of methanol capacity at Bishop and Clear Lake, also in Texas. Celanese said earlier this month that the agreement with SCC provides for most of its North American methanol requirements. It uses methanol in the production of acetic acid and other products.

Premdas said today in response to an analyst's question about the need for methanol production from its Texas plants after 2005 that closure of these facilities would be relatively painless financially as they had already been virtually written down. He pointed out, however, that the Clear Lake facility was operated in a joint venture with Valero and therefore any decision on its future would have to be taken jointly.

By: Neil Sinclair
+44 20 8652 3214

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