August 25, 2015
By Alex Keown, BioSpace.com Breaking News Staff
THE HAGUE, Netherlands – Royal DSM NV will slash up to 1,100 jobs as part of a restructuring plan estimated to save as much as $175 million in structural changes, the company said this morning.
Royal DSM said it expects to see savings between $145 and $175 million by 2017 as it seeks to streamline operations and eliminate any duplication of services.
The changes are coming at a time when some investors are calling for Royal DSM, a company that develops nutritional supplements, to break up into multiple pieces due to declining revenues in the nutrition supplement arena. Third Point LLC, one of the larger Royal DSM shareholders, has argued for the company to split off its nutrition and performance materials division to unlock value, Bloomberg Business said. Third Point has been pushing for a breakup since at least 2014. Last year, in response to pressure from Third Point, Royal DSM was considering selling off three of its divisions, the caprolactam and acrylonitrile operations within its polymer intermediates unit, which makes raw materials for the production of plastics and synthetic fibers, as well as its composite resins business, The Street reported.
In addition to the push by some to break up the company, Bloomberg added the company is facing increased competition in supplement manufacturing in China. The company is also seeing a large drop in revenue in China due to an economic slowdown in that country.
Royal DSM stock was up nearly 5 percent following the restructuring announcement. hit a morning high of $47.14 per share, up from the opening price of $45.44. This was the biggest stock boost the company has seen this year. The stock has fallen about 12 percent since the beginning of the year, Bloomberg Business reported.
The company said it will eliminate between 900 and 1,100 positions by the end of 2017. The cuts are expected to come from multiple departments, including finance, human resources, information technology, legal, communications and corporate business. Additionally, the company said it was seeking to eliminate any duplication of services and was also looking to “implement efficiency measures” in its research and development centers. Approximately half of the job cuts will be in the Netherlands, the company said. Royal DSM reported revenue of about $11.5 billion last year and employs about 25,000 people.
The company said the organizational change will “create a more agile, focused and cost efficient organization, with a stronger business and market focus and globally leveraged support functions.
Feike Sijbesma, chief executive officer of Royal DSM, said there is a need to change operating models in order to provide quicker service to their customers.
“With the adjustments announced today, we become more agile, focused and cost-efficient. Businesses fully focus on growth, while at the same time we become more competitive by leveraging our global support functions,” Sijbesma said in a statement.
Royal DSM is expected to announce a strategy update on Nov. 4.
