HB Fuller to close plants in N America, Argentina
HOUSTON (ICIS)–HB Fuller plans to close a construction-adhesives plant in North America and exit a facility in Argentina, the US-based adhesives producer said on Thursday.
HB Fuller did not specify the locations of the plants or when the actions should take place.
The moves are part of a larger restructuring plan that HB Fuller started in the first quarter, said Celeste Mastin, CEO. She made her comments during an earnings conference call.
That plan was in response to the need to restructure the company’s Construction Adhesives business, she said. “We want to prepare our cost structure for lower volume demand throughout the year.”
That business swung to a first-quarter net operating loss. The company’s fiscal first quarter ended on 4 March.
Significant destocking in Construction Adhesives had started in the fourth quarter and continued in the first quarter, she said. It is uncertain when restocking should start and how significant it should be.
Most of HB Fuller’s construction business serves the nonresidential sector.
In regards to the restructuring plan, HB Fuller expects that 40% of its benefits will be realised in Construction Adhesives.
Overall, two-thirds of the plan’s benefits will be related to cost of sales, and the remainder will be related to selling, general and administrative (SG&A) expenses, Mastin said.
The cost of the plan is $15m-20m.
The company is evaluating its manufacturing network, and Mastin left open the possibility of other plant shutdowns in other parts of HB Fuller’s business.
“We are looking at capacity plant by plant, technology by technology, line by line, with not just now but five year from now in mind,” Mastin said. “As we complete that assessment, there is a possibility we’ll end up shutting other plants.”
HB FULLER EXPECTS MILD GLOBAL
Looking ahead, HB Fuller expects a mild global recession in 2023, and it is aligning costs with its current outlook for the economy, she said.
Inflation is cooling, but Mastin noted that prices continue to rise for a meaningful proportion of the company’s raw materials.
As an adhesives producer, HB Fuller’s raw materials include tackifying resins, polymers, synthetic rubber, plasticizers and vinyl acetate monomer (VAM).
HB Fuller’s other business segments are Engineering Adhesives and Hygiene, Health and Consumable Adhesives.
Thumbnail shows glue, which is an adhesive. Image by Shutterstock.
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