InterviewCytec plans major restructuring in 2009

24 November 2008 22:38  [Source: ICIS news]

Cytec leader Shane FlemingBy Joseph Chang

NEW YORK (ICIS news)--US-based specialty materials and chemicals firm Cytec Industries will sharpen its focus on three growth businesses and will look to cut costs in its other units or even divest them, chairman and CEO-elect Shane Fleming said on Monday.

Fleming delineated Cytec’s growth platforms as engineered materials (aerospace materials), eco-friendly coatings and mining and phosphine chemicals - businesses that represent over half the company’s sales.

“Despite the economic headwinds, we believe there are significant growth opportunities in these areas, and this is where we will invest in the future,” said Fleming in an exclusive interview with ICIS.

For the other businesses, which include building block chemicals, and parts of surface specialties and performance chemicals, “we have to do a better job of operating for cash,” said Fleming.

“And at the appropriate time, given market conditions and others’ interest in these businesses, we would look to potentially divest some of these businesses,” he added.

Eco-friendly coatings are part of the surface specialties business, while mining and phosphine chemicals are part of performance chemicals.

Fleming, who was appointed chairman and CEO of Cytec in October and will start on 1 January, said he will take a more aggressive approach to cost control and portfolio restructuring.

“The approach I’ll take will be more aggressive in terms of operating and reshuffling these non-growth businesses - either shutting down or divesting businesses where we can’t get growth,” said Fleming.

“We need to be able to quickly make these decisions and get on with restructuring our portfolio,” he added.

An overall restructuring plan is being worked out and an announcement is likely to come in early 2009, said Fleming.

The automotive and home construction end markets are slowing significantly and cost cuts are likely to come in product areas that serve these markets, he said.

“We’re absolutely committed to match our cost base with the demand environment. We’re well on way to developing plans to do so,” Fleming said.

Fleming said he expected the coatings market for housing to decline around 8-10% in North America in 2009, and the automotive coatings market to decline beyond 10%.

Between 30-40% of Cytec’s surface specialties business has direct exposure to automotive and construction, he said.

On the growth side, Fleming said he will continue to boost investment in its three targeted areas.

“Capital spending in 2009 will be around 50% higher than our estimated spend of $180m-200m [€142m-€158m] in 2008,” he said.

Major projects being developed 2009 include the addition of a $200m-plus carbon fibre line in Greenville, South Carolina (to be completed at the end of 2010), and a composites expansion in Shanghai, China (to be completed at the end of 2009) - both within the engineered materials segment.

Cytec Industries had sales of $3.5bn in 2007.

($1 = €0.79)

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For more analysis and insight on Cytec Industries, look for the 15 December issue of ICIS Chemical Business magazine

By: Joseph Chang
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