05 February 2013 13:07 [Source: ICIS news]
LONDON (ICIS)--LyondellBasell is talking to employee representatives (works councils) in Europe about further reorganisation, the company confirmed late on Monday.
The latest cutbacks are likely to be made in manufacturing and in research and development (R&D) operations, earlier cuts having come in the commercial functions.
“We are working on a couple of more pretty significant items,” CEO Jim Gallogly said on Friday 1 February in response to questions from investment analysts.
The Netherlands-headquartered petrochemical major had made costs savings in Europe of about $50m (€37m) through earlier programmes, he added, without giving further details.
“We’ve been very respectful to our works councils, working with them closely, but we’ve also been very clear that costs have to come down,” he said. “That’s a lever that we can use and we’re going to.”
“The economic environment in Europe continues to present challenges to the petrochemical industry as well as to manufacturers in many of the markets that we serve,” a company spokesman added.
“For the past year, LyondellBasell has been taking steps to reorganise our operations in Europe to increase efficiency, reduce costs and improve the competitiveness of our businesses. When completed, our European operations will be better positioned to compete in the economic environment that we see today and tomorrow.
“Similarly, we are restructuring our research and development organisations to ensure that they are better aligned to be fit for the future.”
The spokesman said that LyondellBasell will continue to focus on R&D activities that deliver “differential innovations for polymers and catalysts”.
The company will not be commenting publicly as to how individual site locations might be impacted, he added.
LyondellBasell’s businesses in Europe have struggled in a poor macroeconomic and manufacturing environment.
Earnings before interest, tax, depreciation and amortisation (EBITDA) for the olefins & polymers, Europe, Asia, International (O&P EIA) segment were up 11% in the fourth quarter at $50m but 37% lower in 2012 than in 2011 at $561m.
“The global olefins industry continues to experience low operating rates and profitability, negatively impacting our European olefins and commodity polyolefins businesses,” Gallogly said.
($1 = €0.74)
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