InterviewSpartech could close plants to cut costs

04 January 2008 00:56  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS news)--Spartech could close production facilities in North America to cut costs while seeking opportunities in Europe, Asia and Latin America to turn the company's fortunes around, newly appointed president and CEO Myles Odaniell said on Thursday.

“There are clearly issues regarding the short-term performance of the company, which has been impacted by demand weakness in areas such as automotive and construction, as well as the speed at which plastic resin feedstock costs have gone up,” Odaniell said. “However, there are activities we can control on the cost side.”

Odaniell was appointed on Thursday at a time of financial turmoil at Spartech. He previously served as executive vice president of specialty chemicals at Chemtura from 2005-2006, a company which in April 2007 announced its own restructuring including plant consolidation and divestitures.

Although Odaniell said it was early to outline definitive plans for his strategy, he indicated that his experience with restructuring would prove valuable in his new role.

“I’ve worked with businesses that were clearly underperforming and needed structural changes to turn them around,” he said. “To the extent that’s needed here, that’s what we’ll do. We need to do a better job of aligning our costs with the reality.”

Spartech, which operates in three segments - custom sheet and roll stock, packaging technologies, and colour and specialty compounds - has been hit hard by higher costs and weaker demand.

In mid-December the company reported that underlying fiscal fourth-quarter earnings plunged 78% to $2.6m (€$1.77m), on 2% lower sales of $366.2m. Visibility on earnings performance remains cloudy and the situation is expected to continue into the first half of 2008, Odaniell said.

Odaniell said his strategy includes plans to improve the quality of Spartech’s portfolio - and a major part of that would be to expand its higher-value packaging business.

Odaniell characterised his approach as multi-dimensional, drawing on over 25 years of experience in various segments of the chemical industry.

"I've also had the opportunity to work with good, differentiated business with strong technology and growth opportunities in new products ande geographic expansion," he said. "We need to get this done here as well. So this will not be a one-dimensional approach going forward."

($1.00 = €0.68)

By: Joseph Chang
+1 713 525 2653

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