Rohm & Haas announces restucturing, primarily in Europe
Dec 14, 2005
-- Cost saving initiatives expected to yield approximately $35 million in annual pre-tax savings; to be completed within 12-18 months.
-- Restructuring charges expected to be approximately $65 million, with cash charges of $30 million.
-- Closure or partial shutdown of 5 manufacturing facilities and a research and development site.
-- Elimination of approximately 400 positions, primarily in Europe.
-- Fourth Quarter 2005 earnings expected to be $0.45 to $0.50 per share, including restructuring charges of approximately $0.20 per share.
Rohm and Haas Company (NYSE:ROH) announced restructuring initiatives to further improve the efficiency of its manufacturing network in Europe across several chemical businesses. In addition, the Electronic Materials business also announced restructuring of its manufacturing, research and development and sales and marketing organizations in Europe and North America, primarily associated with its Circuit Board Technologies business. The combined restructuring initiatives involve the closing or partial shutdown of manufacturing facilities in the United Kingdom and Germany, and include the elimination of approximately 400 positions from the company's global workforce.
"The manufacturing realignments within several of our chemical businesses reflect the lower demand in many of their European markets, as well as the need to improve operating efficiencies and reduce excess capacity in the region," said Pierre Brondeau, Vice President and Group Business Executive, Electronic Materials, and European Regional Director. "The Electronic Materials realignment reflects the continued migration of some of its markets, particularly the printed circuit board market, from Europe and North America to Asia-Pacific. We are committed to maximizing the growth opportunities we see in all our key markets throughout Europe, while aligning our operations to be closer to the customer base and increasing operating efficiencies."
As a result of the restructurings, which will be completed within 12 to 18 months, the company expects total pre-tax charges for the fourth quarter 2005 to be approximately $65 million, resulting in a fourth quarter 2005 restructuring charge of approximately $0.20 per share. The cost savings initiatives are expected to yield pre-tax savings of approximately $35 million annually. The restructuring charges include pre-tax asset impairment charges of approximately $35 million, and cash charges related to termination benefits and other expenses of approximately $30 million. The initiatives are expected to generate future pre-tax cash charges of approximately $10 million to close the facilities.
The company also updated its fourth quarter 2005 guidance, noting that stronger demand in higher margin businesses is contributing much improved earnings over the previous year. Fourth quarter 2005 earnings are expected to range between $0.45 and $0.50 per share, including the $0.20 per share in restructuring charges announced today and not included in prior guidance, and also assumes normal ice-control sales and no abrupt inventory corrections among the company's customers.