Chemical and advanced materials maker Celanese Corporation ( CE ) announced that it will shut down two of its European manufacturing facilities by the end of 2013. They are its acetic anhydride plant in Roussillon and the vinyl acetate monomer (VAM) unit in Tarragona.
Celanese added that its French and Spanish subsidiaries have informed their employee delegates in Roussillon, France, and the work council in Tarragona, Spain, of its plans to initiate an information and consultation process regarding the closure the two facilities. These consultations have led to negotiated and approved redundancy and social plans for the affected employees. The social plans include measures for minimizing the effects of the closures on the facilities' employees.
Due to the closing of the facilities, Celanese expects to incur personnel-related exit costs and other facility-related shutdown costs in the range of $100-$110 million, including roughly $35-$45 million of non-cash asset impairments, mostly in the fourth quarter of 2013. These expenses will be excluded from the company's adjusted earnings per share and adjusted earnings before interest and taxes (EBIT) performance records. Celanese estimates related cash outflows to occur over a one-year period. The company projects savings from these closures to be in the range of $20-$30 million in 2014.
In May 2013, Celanese divulged its plans to find a potential buyer for both the facilities focusing on industrial candidates. Celanese's aim was to find a buyer who would ensure sustainable execution of operations at the properties, in accordance with the company's financial criteria, and at the same time retain its employees. However, Celanese did not succeed and instead decided to plan for the possible closure of both - the facility in Roussillon and the production unit in Tarragona.
The action was undertaken to maintain the competitiveness of the Celanese acetyl business. The need for these contemplated projects came from an assessment of Celanese's overall corporate strategy, including an appraisal of its global manufacturing facilities.
Celanese currently has a Zacks Rank #3 (Hold).
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