Food and pharmaceutical ingredients company Rhodia has announced a major restructuring drive that has coincided with the departure of its chairman and chief executive Jean-Pierre Tirouflet.
Tirouflet has been in conflict with minority shareholders who blame him for failing to improve the performance of the company following its split with Rhone-Poulenc, which merged with the German company Hoechst to form the pharmaceutical group Aventis.
The move follows a difficult financial period for the company which posted a first-half loss of €150 million and has said it expects little improvement in the last six months of 2003. Tirouflet had blamed the poor performance on a sector-wide slump and the global economic slowdown.
On Friday, Rhodia announced that its earnings before interest taxes, depreciation and amortisation (EBITDA) for the third quarter of 2003 will be between €70 and €80 million, compared with €149 million in the same period of 2002. It also confirmed that it does not expect a significant improvement in market conditions during the last quarter of the year, blaming "continued high petrochemical raw material prices, persistent weak demand and a negative effect from the value of the dollar."
The restructuring will involve a refocusing of the business portfolio and the group's financial structure, as well as cost reduction programme, to help the firm "weather the unfavourable economic cycle and benefit fully from the recovery in the chemical sector when it occurs," said Rhodia in a statement.
Among the measures on the table at Rhodia are €600 million-worth of divestments through to the end of 2004, and more stringent cost reduction exercises that should save €150 million by 2006. No details are available yet on the business that may be sloughed off. Meantime, the cost reductions will be over and above the €300 million-plus savings by 2005 set out in Rhodia's earlier program, announced in January.
Job losses are anticipated as part of the restructuring, but the company said it would not release details of its plans on staffing until later this month. Rhodia is due to present its third-quarter results on 30 October.
Tirouflet will be replaced at the helm of Rhodia by Jean-Pierre Clamadieu, who will also serve as chairman until a change in the company statutes allows Yves René Nanot, currently over the age limit of 65, to fulfil that role. Nanot is currently serving as chairman of the audit committee at Rhodia.