15 December 2008 09:08 [Source: ICIS news]
SINGAPORE (ICIS news)--Dutch chemicals producer DSM said on Monday it will eliminate 1,000 jobs to generate annual savings of up to €100m ($75m) as it struggles to cope with tough business environment amid the global economic downturn.
Cutting its workforce by 5% will entail a one-off cost of €50m, of which €20m will be recognized in DSM’s fourth quarter results, while it expects to achieve the full cost-savings in 2010.
“We are swiftly taking the necessary actions to maximize our cash flow and preserve profitability by reducing working capital and costs while at the same time further strengthening our competitive position,” said DSM managing board chairman Feike Sijbesma in a statement.
Taking into account the cost of the structural changes, DSM has revised down its operating profit guidance this year by €100m to €900m. This will still be record earnings for the company, representing a 10% rise from 2007 levels, DSM said.
“It is clear that the turmoil which began in the financial sector is seriously eroding business and consumer confidence in the wider economy,” he said, citing that DSM’s Materials Sciences businesses “have increasingly been affected by the economic downturn”.
Some of DSM’s end-markets in this segment suffered continued sharp drop in demand in the fourth quarter due to weakening consumer spending in automotive, building and construction, coatings and electrical and electronics sectors.
“This has occurred in combination with significant de-stocking in the downstream industries due to scarcity of credit and rapid price decreases of raw materials,” the company said.
The difficult market conditions were taking a toll on DSM Fibre Intermediates, DSM Engineering Plastics, DSM Resins and some parts of the Base Chemicals and Materials cluster that the group had to implement temporary plant shutdowns to adjust production to reduced demand.
DSM’s life sciences businesses, on the other hand, continue to perform well, it said.
$1 = €0.75
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