Designed to align the organization to specific portfolio choices, simplify the business processes and optimize manufacturing footprint, “Streamline” by 2016 will result in about 200 job losses companywide and annual cost savings of €20 million ($25.2 million).
The manufacturing facility in Kansas City produces dry blend ingredients for sale to the bakery, food and beverage industries. The planned consolidation in New Jersey will result in associated one-off cash costs of €20 million plus €10 million in capital expenditures.
Corbion’s Biobased Ingredients business comprises the food and biochemical businesses. It is characterized by modest growth, good margins and cash generation, according to the company. To increase cash flow and returns, Corbion has defined differentiated market strategies and portfolio choices.
The planned consolidation is part of Corbion’s strategic direction for 2015-18. In its Biobased Innovations business, Corbion plans to emphasize production of polylactic acid (PLA).
“Given our strong position in lactic acid, our unique high heat technology and the market need for a second PLA producer, we will forward integrate in the bioplastic value chain, from being a lactide provider to a PLA producer,” Corbion said.
If Corbion is able to secure at least one-third of plant capacity in committed PLA volumes from customers, Corbion will invest an estimated €60 million in a PLA plant in Thailand.
“Our updated strategy addresses the global megatrends of resource depletion, population growth and food security,” said Tjerk de Ruiter, chief executive officer of Corbion. “With our 80 years of experience and knowledge in lactic acid fermentation, protected by IP and proprietary knowledge, we are well positioned to alleviate the impact of these trends with our biobased solutions. Corbion will accelerate its thrust into the biotechnology arena, making the next step in the bioplastics value chain by becoming a PLA producer. With entry into PLA, Corbion will bring new biodegradable solutions to the plastic market.”
Because of lower estimated cash outlays in the coming years, Corbion plans to raise its regular dividend to 35% to 45% of the net profit adjusted for non-cash one-off items. Previously it was 35%. Corbion also plans to distribute €100 million to shareholders in 2015 and will give more details on the distribution in the first quarter of 2015.