Rhodia changes direction
In a press release from Rhodia the directors are looking at refocusing and cost cutting after resignations from the board. The press release reads:
The continuing severely depressed economic environment will negatively impact third quarter results due to a combination of continued high petrochemical raw material prices, persistent weak demand and a negative effect from the value of the dollar. As a result, Rhodia estimates that Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) for the third quarter 2003 will be between 70 and 80 million euros, compared with 149 millions euros in Q3 2002 on a comparable basis (constant structure and exchange rates). Moreover, the Group does not expect a significant improvement in market conditions during the last quarter of the year.
In view of this evolution, the Board of Directors decided to put in place immediately a plan of action involving a refocusing of the business portfolio, cost reduction and the Group's financial structure to enable the Group to weather the unfavourable economic cycle and benefit fully from the recovery in the chemical sector when it occurs.
Jean-Pierre Tirouflet, in recognition that the appointment of a new team would help facilitate the success of this action plan, submitted his resignation to the Board of Directors who accepted it.
The Board of Directors has named Yves René Nanot, now Chairman of the Audit Committee, as Vice-Chairman of the Board to supervise the implementation of the action plan. The Board also decided to separate the posts of Chairman and CEO, following the mechanism established by the French NRE (New Economic Regulations) law. Yves René Nanot will be named Chairman of the Board of Directors as soon as the General Shareholder's Meeting approves a modification of Rhodia's by-laws to raise the authorised age for the position of Board Chairman beyond age 65.
The Board of Directors also co opted Jean-Pierre Clamadieu as a Group director and named him Chief Executive Officer. He will also assume temporarily the position of Chairman of the Board of Directors, pending the modification of the by-laws, which will be proposed to shareholders, at the latest, when the General Shareholder's Meeting is convened to approve the 2003 annual results
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- The Board of Directors also decided on the following actions:
- Change in the Group's strategy will result in at least 600 million euros in divestitures by the end of 2004.
- Reshaping and simplification of Group structures in order to generate additional savings of more than 150 million euros taking full effect in 2006
Rhodia has decided to proceed with a refocusing of its strategic portfolio in order to concentrate its resources on its growth businesses and to accelerate the reduction of its debt. This decision will result in the launching of a significant divestment program with an objective of producing at least 600 million euros for divestments by the end of 2004.
In addition to the impact on costs that will be achieved from the reduction of the business portfolio, these measures also will result in a simplification of the Group's operating processes.
These measures will be added to the results of cost reduction plans already announced by the Group in 2002 and 2003 that are projected to save approximately 38 millions euros in 2003, 123 million euros in 2004 and 150 million euros in 2005.
Finally, the Board of Directors reviewed the status of discussions between the Group and its principal banking partners on the financing conditions in view of the new results forecasts.