The Dutch specialty chemical company DSM says it will cut 1,000 jobs—4% of its workforce—as part of a companywide program to reduce costs. The move follows a 14% drop in the firm’s earnings before interest, taxes, depreciation, and amortization to $359 million in the second quarter compared with the year-ago period. Sales were flat at $2.8 billion.
More than half of the job cuts will be made in Europe, including about 400 in the Netherlands. The company says its plans include the closure of a plant in Sweden producing lipids and a “comprehensive program” to reduce fixed costs and accelerate sales of innovative specialty chemicals in its engineering plastics business.
DSM expects its program, which will be implemented over the next 18 months, to deliver annual savings of about $185 million by 2014. This program is in addition to already-announced restructuring initiatives at DSM’s resins business that aim to deliver annual savings of more than $30 million by 2013.
CEO Feike Sijbesma blames the company’s dip in financial performance partly on weakness in caprolactam, a nylon intermediate. DSM is introducing its cost-reduction program now because of “challenging developments in some markets,” particularly Europe, Sijbesma adds.
DSM continues to make acquisitions despite the savings plan. A day after revealing the cuts, it announced it would acquire the Brazilian animal nutrition supplements producer Tortuga Companhia Zootécnica Agrária for $575 million. Sijbesma says the purchase will bring to $2.2 billion the value of nutrition-related acquisitions the firm has made in the past two years.