Company taking next steps in executing strategy that focuses on higher margin and higher growth specialty products, diversifies feedstocks, and optimizes manufacturing network
Ingevity Corporation announced a number of strategic actions designed to further reposition the company’s Performance Chemicals segment. “What we are doing is an important step toward achieving our strategic objectives of improving the profitability and reducing the cyclicality of the Performance Chemicals business and the company as a whole,” said John Fortson, President and CEO, Ingevity Corporation.
Actions increase our focus on growing our most profitable Performance Chemicals businesses such as Pavement Technologies and accelerate our transition to non-crude tall oil (CTO)- based fatty acids (AFA). Our decision is the result of a careful evaluation of various strategic options to address the cyclicality of our rosin-based end markets, as well as the significant structural changes and elevated pricing of CTO due to the biofuels market. Going forward, we will continue to strengthen and diversify the Performance Chemicals business through the introduction and expansion of complementary and new product offerings based on alternative chemistries, such as soy and canola-based fatty acids.”
Announcement includes the permanent closure of the company’s DeRidder, Louisiana, production facility that manufactures a range of CTO-based products that are primarily for the Industrial Specialties business, which is reported within Ingevity’s Performance Chemicals segment. Ingevity expects to close the DeRidder facility by the end of the first half of 2024. The company also announced additional corporate and business cost reduction actions, which combined with those previously announced, are expected to result in total annual savings of $65-75 million beginning in 2024.
As a result of the Performance Chemicals repositioning, Ingevity expects to incur aggregate charges of approximately $280 million, consisting of approximately $180 million in asset-related charges, approximately $15 million in severance and other employee-related costs and approximately $85 million in other restructuring costs, which include decommissioning, dismantling and removal charges and contract termination costs. The company expects approximately $180 million of the total charges to be non-cash. The majority of non-cash charges and 50-60% of cash charges are expected to be recognized by the end of the first half of 2024.
Employees affected by announcement include approximately 180 people at the DeRidder facility and approximately 120 people in business and support functions. Together with the actions taken arlier in 2023, headcount reductions represent almost 20% of Ingevity’s global workforce.
“We are committed to working with our customers to minimize any disruption caused by this decision and remain focused on offering a broader portfolio of products in the future,” said Ingevity Senior VP and President, Performance Chemicals, Rich White.
Register Now to Attend Agrochem Summit 2023 on Friday, 15th December 2023, The Park Hotel, New Delhi
Subscribe To Our Newsletter & Stay Updated