Boston, Massachusetts – Carbon black manufacturer, Cabot Corporation, will cut approximately 300 positions globally as part of a restructuring, which aims to save $50 million (€44 million) of costs in 2016 fiscal year, the company announced on 20 Oct.
Cabot to cut 300 jobs worldwide
Prevost cited a number of challenges for his business, including lower oil prices, slowing demand in Asia and South America and less favourable foreign currency exchange rates.
“These are difficult decisions because we recognise they will impact our valued employees, their families and the communities where we operate,” he added.
The company expects the restructuring plan, which is subject to local consultation requirements and processes in certain locations, to result in a pre-tax charge to earnings of approximately $35 million, mainly comprised of severance and employee benefits.
Prevost expects the restructuring to contribute to Cabot’s stated target of delivering an improvement of $0.75 of adjusted earnings per share in fiscal 2016 as compared to fiscal 2015.
Speaking to ERJ’s sister publication Rubber & Plastics News earlier in April, Cabot financial officer Eddie Cordeiro did point out certain challenges facing the business in 2015.
“As we look ahead we expect a modest level of growth in 2015,” said Cordeiro.
With declining oil prices in the first fiscal quarter, he said, we anticipate that many of our customers will be managing their inventories down leading into the calendar year-end.
“In addition to muted volume growth we’re also seeing headwinds in 2015 related to lower raw material purchasing savings and weakening of various foreign currencies against the US dollar. In addition, we are currently seeing an increasingly competitive environment as we negotiate contracts for 2015,” he noted.
“All-in-all, if we do not see an economic recovery early in calendar 2015, we expect the year to be somewhat more challenging than 2014 for the reinforcement materials segment.”
In 2014, Cabot opened a new zinc production facility using technology in Xingtai, China, through a joint venture with the Risun Group. Also, in 2013 the firm purchased the remaining 60 percent interest in Mexican joint venture Nhumo SA de CV to strengthen its presence in North America.
Cabot expects the facilities will help its rubber carbon black growth plan in North America and Asia.