Rohm and Haas to slash capacity in comprehensive restructuring
PHILADELPHIA, June 17, 2008 (Press Release) - Rohm and Haas Company today announced a comprehensive set of actions to restore profitability and ensure the achievement of its Vision 2010 goals by realigning its manufacturing footprint and support services.
In making the announcement, Chairman and Chief Executive Officer Raj L. Gupta noted, "Many of these actions have been discussed publicly in recent quarters as initiatives that would restore profitability, address the changing needs of our customers, and contribute to our growth objectives. We are now convinced it is a more prudent course of action to accelerate the implementation of these plans due to the rapid erosion of business conditions in the U.S., and the impressive growth of our business in many Rapidly Developing Economies."
Gupta added, "The actions announced today complement the pricing surcharge implemented recently to address rising raw material, energy and freight costs. Taken together, these actions demonstrate leadership on our part to remain a viable, valued supplier to our customers."
Today's actions will impact approximately 925 positions, primarily in North America, and are expected to result in an estimated $0.35 per share charge for the second quarter of 2008. In 2010, the company expects to deliver pre-tax run-rate savings of approximately $110 million, with less than half of the benefit realized in 2009. Major elements of the plan are:
- A 30 percent reduction of installed capacity in the company's emulsions network in North America, reflecting equally the impact of productivity improvement efforts and reduced market demand;
- Significant reductions in overhead expenses for the Specialty Materials group in mature markets;
- Adjustment of the company's infrastructure for its Electronic Materials group, reflecting the increased shift of the business to Asia;
- A number of initiatives in other businesses and regions.
The company also expects earnings per share from operations to be reduced by $0.11 per share in the second half of 2008, primarily due to accelerated depreciation and other costs related to these actions.
"When we launched our Vision 2010 plan in October 2006, we said we would transform Rohm and Haas into a more focused, more profitable and faster-growing company," said Gupta. "Since then, we have made substantial progress in reshaping our portfolio, expanding in Rapidly Developing Economies and strengthening our market leadership positions across the globe. The actions we are initiating today will secure our ability to achieve our Vision 2010 goals."
