Heerlen, The Netherlands - Royal DSM NV announced 15 Dec that it has taken steps to strengthen its competitive position, and save costs of up to Euro 100 million a year by 2010.
DSM said these measures, and others to address the "current more difficult market conditions," mean it has revised its full-year guidance for 2008 to an operating profit of above Euro 900 million - around 10 percent higher than in 2007 and still a record result for the company.
The group's life sciences and Dyneema businesses have been relatively unaffected by the current difficult market conditions, unlike its Fibre Intermediates, Engineering Plastics, Resins and some parts of its Base Chemicals and Materials cluster, said DSM. In these groupings "temporary plant shutdowns have already been implemented in order to adjust to reduced demand." DSM's resins business includes a number of speciality polyurethane-based materials, including a range of waterborne types.
DSM pointed out that, while such shutdowns cause losses, they also reduce working capital. Other measures - reduction of temporary contract workers, postponement of projects and a stronger focus on purchasing prices - have been implemented to improve cash flow and reduce costs.
"It is clear that the turmoil which began in the financial sector is seriously eroding business and consumer confidence in the wider economy," said Feike Sijbesma, DSM chairman: "Most of our Materials Sciences businesses have increasingly been affected by the economic downturn. We are swiftly taking the necessary actions to maximise our cash flow and preserve profitability by reducing working capital and costs while at the same time further strengthening our competitive position."
DSM is also taking a number of structural cost-saving actions to strengthen the profitability and future competitiveness, aimed at reducing its workforce by about 5 percent, or 1000 positions. Total savings of up to Euro 100 million per year are expected to be fully achieved in 2010, at a one-time cost of around Euro 50 million.