Specialty chemical maker Chemtura Corp. (CHMT,CEMJQ.PK) announced a restructuring plan to reduce manufacturing conversion costs by about $50 million, or about 10 percent annually, eliminate around $15 million of annual stranded costs arising from the previously announced sale of the Chemtura AgroSolutions business, and reduce selling, general and administrative costs by at least $12 million annually.
According to the company, excess industry capacity in bromine and certain organometallics combined with continuing volatility in certain markets it serves has restricted the firm's ability to achieve the targeted improvement in results.
While the company expects the bromine industry and electronics market to recover and grow to new heights, that growth may not occur in the coming year.
Craig. Rogerson, Chemtura's Chairman, President and CEO, said, "To meet our expected performance improvement in 2015, we are taking steps to address these challenges by accelerating initiatives to reduce our manufacturing costs and SG&A expenses, in addition to the elimination of stranded costs arising from the sale of our agrochemicals business."
The company expects to incur approximately $37 million in cash costs to implement the restructuring plan, recording the majority of this expense in the fourth quarter of 2014 and the first quarter of 2015.
The cash expenditures associated with these actions will continue into the third quarter of 2015.
The firm expects that the full run rate of the manufacturing and SG&A savings will be embedded in its performance by the third quarter of 2015, with annual savings of approximately $50 million for calendar year 2015.
Of the $15 million of annual stranded costs, Chemtura expects having eliminated them by the second quarter of 2015 with approximately $3 million being incurred in the first quarter of 2015.
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