08 May 2009 17:23 [Source: ICIS news]
LONDON (ICIS news)--US specialty chemicals group Cytec does not expect its coatings resins business to return to pre-downturn performance until 2012-13, it said on Friday.
In an interview with ICIS news, president of the specialty chemicals division, Frank Aranzana, said there were no signs of a sustained recovery from collapsed demand in important end-use markets such as automotive and construction.
There was improved demand for coatings in Asia, particularly ?xml:namespace>
“Car sales have increased in
Aranzana said volumes in coatings resins were down 43% year on year in the first quarter.
The downturn began last August for this segment, he said. “July was our best month ever with strong demand in Europe and Asia although the
Since then, there has been no recovery. In the first quarter, the surface specialties division posted an operating loss of $20.7m (€15.5m) against an operating profit of $20.6m in same period last year, amid a 46% drop in sales to $243m.
“Destocking is still taking place across the value chain. In automotive it might take all year to reduce inventory and there could be prolonged shutdowns. In construction, the prospects in
He said the company “has taken permanent, structural actions to match supply to demand”.
“We are working to consolidate assets, closing older capacity and moving production to larger assets,” he added.
Cytec announced in January that it would cut 600 jobs or 10% of its workforce and close capacity in La Llagosta,
In March the company increased this target to 12% - more like 700 people - saying extra steps were needed to maintain liquidity.
Aranzana said the Belgian powder unit should be closed by the end of June, and the others by the end of the year.
The coatings division was particularly badly hit by this reduction, suffering a 17% cut in workforce as older solvent-based capacity is closed.
“We will have reduced capacity in solvent borne resins by 30% by the end of this year. Cytec’s total manufacturing capacity for coating resins will reduce from 720,000 tonnes per year to 630,000 tonnes/year by the end of 2009. Capacity utilisation across the company was only 50% in the first quarter of 2009,” he said.
The company has also imposed a salary merit freeze, bonus reduction, cuts to dividends, reductions to pension payments in the
Aranzana’s specialty chemicals division had 2008 sales of $2.4bn, accounting for 65% of Cytec’s total $3.6bn sales. His unit manufactures coating resins and additives, mining chemicals, phosphines, specialty and polymer additives.
One main focus for growth is water-borne and Radcure resins, which are replacing less environmentally acceptable solvent-based resins.
Cytec’s most profitable division is engineering materials, which makes composites for aerospace applications.
($1 = €0.75)
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