Dutch DSM Restructures Pharma Units In-Line With Strategy; Announces Job Cuts
12/20/2005 12:09:07 PM
AMSTERDAM -(Dow Jones)- Dutch chemical company DSM NV (00981.AE) on Tuesday said it will restructure the activities of its business units DSM Pharma Chemicals and DSM Biologics.
The restructuring follows a study (forming part of DSM's recently introduced strategy Vision 2010 and announced in DSM's report for the third quarter of 2005) involving a closer scrutiny of DSM's pharma assets. The most important elements of the restructuring are the anticipated discontinuation of the DSM Pharma Chemicals operations in South Haven, Michigan (USA) in the first half of 2007 and the mothballing of the DSM Biologics facilities in Montreal (Canada) in the beginning of 2006.
Strategic considerations have led DSM to decide to close the DSM Pharma Chemicals site in South Haven, Michigan (USA), in the second quarter of 2007, affecting 142 employees.
Ongoing activities will be absorbed in DSM Pharma Chemicals Linz (Austria) and Venlo (the Netherlands). DSM Pharma Chemicals will assist customers in transitioning to these manufacturing sites as suppliers, or will assist in the sourcing of product from alternative sources.
Operations in Montreal will be discontinued at the beginning of 2006. Unavoidably, 85 employees will become redundant.
Financial consequences The closure and mothballing of DSM Pharmaceutical Products' sites in South Haven and Montreal, respectively, will lead to an after tax exceptional item of approximately EUR 57 million, of which approximately EUR 49 million will be due to the impairment of assets. The measures to be taken in DSM Pharmaceutical Products will contribute around EUR 20 million to EBIT for the Pharma cluster from the second half of 2007 onwards, one reason being that they prevent foreseeable future losses.
In view of this, together with an expected release of certain provisions, the fourth quarter result of DSM is expected to carry an exceptional item after tax of approximately EUR 35 million negative. DSM confirms its outlook for 2005 as given at the publication of its third quarter results: DSM expects its operating profit (from ordinary activities excluding exceptional items) for 2005 to exceed EUR 800 million. This means that DSM's operating profit for 2005 will be substantially higher than in the previous year (EUR 567 million).