Cabot targets cost savings, capex cuts amid tariff shifts

Boston, Massachusetts – Cabot Corp. is taking a series of cost and procurement actions as global supply chains adjust to shifting tariff regimes, according to president and CEO Sean Keohane.

The actions include optimising product and grade mixes globally and adjusting prices in line with potential trade barriers, Keohane said during a 5 May second quarter earnings call.

While the company expects limited direct impact from the tariffs, Keohane noted that uncertainty is prompting customers to take a cautious approach to inventory.

“We are seeing signs of customers curtailing production to reduce inventory levels and manage risk until the trade picture becomes clearer,” he said.

To address the uncertainty caused by tariff policies, Cabot said it was executing a broad range of 'countermeasures'.

The company is working closely with customers to understand how their production might shift as a result of tariff policies and offering volume support from other global locations.

Keohane also said that in “limited number of cases” where Cabot products are exposed to direct tariffs, the company expects to recover the impacts through formula and spot pricing adjustments.

Over the short term, Cabot expects volumes to be impacted by customers adopting a more cautious approach to inventory levels and are implementing product optimisation actions.

Cabot is also executing fixed cost and procurement initiatives, through which it expects to achieve $30 million (€26.5 million) in savings in fiscal 2025.

The supplier is also adjusting the timing of some of its capital projects to align with customer demand, resulting in a lower CapEx forecast of $250-$270 million (€225-€243 million), compared to an earlier estimate of $250-$300 million.