Specialty materials provider Trinseo has announced restructuring initiatives that the company reports will better position the business for longer-term growth, improved profitability, and increased cash generation. The changes were implemented on October 1, 2024.
The company combined the management of its Engineered Materials, Plastics Solutions, and Polystyrene businesses, resulting in a reduction in workforce due to the consolidation of business management roles and support functions. According to Trinseo, these actions began in the third quarter of 2024 and are anticipated to be substantially complete by the end of 2025. The expected annualized run rate cost savings is $30 million with approximately $25 million realized in 2025 and the full run rate achieved by the end of 2026.
The newly combined Engineered Materials, Plastics Solutions, and Polystyrene businesses will be led by Francesca Reverberi, SVP, Engineered Materials. Bregje "Bee" Van Kessel, who currently leads the Plastics Solutions and Polystyrene businesses, will assume the role of SVP, Corporate Finance and Investor Relations reporting to David Stasse, EVP, chief financial officer. Han Hendriks, who leads technology and innovation, will add oversight responsibilities for the company’s sustainability activities as chief technology and sustainability officer.
Additionally, the company has decided to exit virgin polycarbonate production at its Stade, Germany, production facility following discussions with the relevant works councils. Production is anticipated to end by January 2025 with severance and related benefit payments expected to complete by the end of 2026. Once operations have ceased, all the company’s polycarbonate needs for its downstream, differentiated compounded products will be purchased from external suppliers, including its licensees, with the exception of its dissolution-based polycarbonate production. This purchasing change is expected to result in an annualized run rate profitability improvement of $15 million to $20 million relative to manufacturing at Stade.
“These measures are the result of a thoughtful analysis of our portfolio and industry trends, combined with an understanding of the global competitive environment. We believe they will result in a more streamlined organizational structure that will fuel our ability to continue to grow strategically, while improving service to our customers and reducing costs,” said Trinseo president and CEO, Frank Bozich.
Trinseo reports that it expects to record total pre-tax restructuring charges of $23 million to $28 million, principally comprised of $22 million to $26 million of severance and related benefit costs and $1 million to $2 million of asset-related and contract termination charges, primarily related to the virgin polycarbonate manufacturing site in Stade, Germany.
“None of these actions are taken lightly, especially those directly impacting our colleagues. These are extremely difficult decisions that are in many ways driven by macroeconomic factors that are simply beyond our control,” said Bozich. Additionally, Bozich said, “The contributions of our talented employees are greatly valued, and we are committed to doing everything we can to help them transition during this challenging time. We also greatly appreciate the continued focus and resiliency of our dedicated employees around the world as we navigate these changes together.”
Learn more about Trinseo at www.trinseo.com.
