MOOSCOW (MRC) -- Trinseo, a specialty material solutions provider, announced updates to its asset restructuring initiatives, said the company.
In aggregate, these actions are expected to result in approximately USD60 million of annual profitability improvement versus the fourth quarter run rate, most of which will be realized in 2023. These actions consist of the following:
Closure of manufacturing operations at the styrene production facility in Boehlen, Germany. The closure is the result of an uncompetitive position in the global styrene market due to the site’s subscale size, industry capacity additions and elevated natural gas prices in Europe.
Closure of one polycarbonate production line in Stade, Germany due to an uncompetitive position in the global polycarbonate market. The Company will continue to produce polycarbonate for use in its downstream compounding business with the remaining assets. The line closure is expected to result in lower costs and significantly less exposure to the cyclical merchant polycarbonate market.
Consolidation of the PMMA sheet manufacturing site in Matamoros, Mexico into the continuous sheet manufacturing operation of Aristech Surfaces in Florence, Kentucky.
Capacity reduction of SB latex at the Hamina, Finland site starting mid-year 2023 due to over-capacity of SB latex in Europe.
Trinseo expects to incur USD79 million to USD89 million of pre-tax, non-recurring charges related to the cessation of manufacturing activities at these facilities. Of this, USD55 million to USD61 million is expected to be incurred in the fourth quarter of 2022, with the remainder expected to be incurred through 2024. The cash amount of these charges is expected to be USD67 million to USD77 million, including approximately USD40 million in 2023, with substantially all expected to be incurred through 2024. The actual timing and costs of these actions may differ from the Company’s current expectations and estimates, and such differences may be material. These charges are subject to ongoing negotiations with the works councils, industrial associations and government authorities.
Additionally, on November 29, 2022, the European Commission issued a final decision imposing a fine to Trinseo in the amount of EUR32.6 million related to the commission’s 2018 investigation of styrene purchasing practices in Europe. This amount was in line with our previously recorded liability and was paid in full in December 2022.
We remind, Trinseo, a specialty material solutions provider and Japan Steel Works Europe GmbH (JSW EU), a group company of The Japan Steel Works, Ltd. (JSW), a manufacturer of industrial and plastics machinery, recently announced a collaborative effort on chemical recycling of polymethyl methacrylate (PMMA).
Trinseo a specialty material solutions provider, partners with companies to bring ideas to life in an imaginative, smart, and sustainability-focused manner by combining its premier expertise, forward-looking innovations and best-in-class materials to unlock value for companies and consumers. From design to manufacturing, Trinseo taps into decades of experience in diverse material solutions to address customers’ unique challenges in a wide range of industries, including consumer goods, mobility, building and construction, and medical.