08 January 2009 15:50 [Source: ICIS news]
TORONTO (ICIS news)--US chemicals producer Cytec Industries on Thursday announced a restructuring plan, including 600 job cuts and plant closures, and also reduced its 2008 earnings guidance as it responds to the “unprecedented downturn” in global markets.
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“The unprecedented downturn in the global economy over the last several months has led to a dramatic reduction in demand for our products across many of our industrial markets leading to reduced earnings in the fourth quarter,” said CEO Shane Fleming.
“We do not expect to see a short term turnaround in the economy and, as a result, we are taking proactive measures to reduce costs, improve cash management and better position Cytec to focus on its growth platforms,” Fleming said.
“It is our view that the current economic environment will extend at least throughout 2009 and we must therefore take immediate actions to align our cost structure to the changing and challenging demand environment,” he added.
The 600 job cuts - about 10% of the company’s overall workforce - would be mostly in Cytec’s specialty chemicals product lines, it said.
Going forward, Cytec would focus on its strengths in engineered materials, eco-friendly coating resins and mining and phosphine chemistry, Cytec said.
The restructuring measures, which are expected to yield annualised cost savings of $85m by the end of 2009, had been expected. Fleming, who was appointed CEO last year, had first outlined his plans in an interview with ICIS news in November.
A key objective of the measures was to generate some $200m of additional cash flow by the end of 2009, said chief financial officer Dave Drillock.
“With the aggressive actions just noted and taking into account the current demand outlook, we do not foresee any difficulties funding our planned investments in our growth businesses, the restructuring initiatives, debt service and our current dividend,” Drillock said.
However, stock repurchases would be modest “at best”, given the economic turmoil and uncertainty, he said.
Cytec expected to record a pre-tax charge of up to $140m over the next several quarters to account for the restructuring, it said.
The company also reduced its full-year 2008 earnings per share guidance to $3.45-3.50, from previously $3.75-3.85.
Cytec’s shares were down 2.7% to $22.87 in Thursday morning trading in
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