Millipore plans to close four facilities

15-Sep-2008 - Last updated on 16-Sep-2008 at 12:26 GMT

Millipore is planning on closing four facilities, generating annual savings of up to $15m, as it attempts to cut costs by streamlining its operations.

The company’s operations at Lincoln Park, New Jersey and Nodinge, Sweden are believed to be most immediately under threat, while the axe also hangs over facilities at Consett and Cambridge, United Kingdom.

If implemented the plant closures are expected to result in 140 job losses, although staff may be relocated as work is moved to new locations.

The development was revealed in a filing to the US Securities and Exchange Commission. In the filing Millipore cites difficult market conditions as being the catalyst for its actions.

In particular Millipore’s second quarter results highlighted the difficulties facing its Bioprocess division, which generates over 40 per cent of total revenues.

Although overall operating income for the quarter rose the stagnation of revenues generated by the Bioprocess division is clearly cause for concern.

Responding to the second quarter results Martin Madaus, CEO of Millipore, said: “This exceptional top-line performance was offset by a decline in revenues from our Bioprocess Division, which continues to be adversely affected by reduced purchases from a handful of our largest North American biotech customers.

“Although we expect our Bioprocess Division and the overall company will report year-over-year revenue growth in the second half of the year, we do not anticipate spending from these large, US biotech customers will stabilise until the end of 2008. Therefore, our Bioprocess results will continue to be negatively affected for the remainder of this year.”

The Bioprocess division has posted little to no growth for several quarters, leading to Millipore taking action. However, Millipore is set to take an initial financial hit from the closures, with savings taking time to materialise.

Millipore is anticipating the closures will cost it up to $10m in employee separation costs, $3m in lease termination and up to $11m in fees for consulting, employee retention, and facility transition.

A further $6m loss is anticipated for non-cash charges for accelerated depreciation, taking the total related charges to $25-30m.

Millipore anticipates that these activities will be completed by 2010, with the company beginning to realise a profit from the cutbacks in 2009.