"Global weakness in the tyre, automotive and construction industries, intensified by customer inventory reduction, is causing significant volume declines during the first quarter of fiscal 2009 in each of our major geographies,” said Cabot president and CEO Patrick Prevost. “First quarter volumes in our rubber blacks, performance products and fumed metal oxides are expected to be 20%-30% lower than in the same period last year.
"It is difficult to foresee how the remainder of the fiscal year will develop, but we expect that the lower first quarter volumes will have a considerable impact on the full year and we are preparing for an extended slowdown,” Prevost continued. “In light of this, we have gone through a detailed review of our global operations and have developed a plan to reposition Cabot for these new market conditions. In addition to the current curtailments of as much as 40% of our production, we will implement operational and structural adjustments. These actions, which began in October of this year, are expected to yield in excess of $80 million of annualised costs savings for fiscal 2010. We will also reduce our capital spending by approximately $50 million versus fiscal 2008 and accelerate our aggressive working capital reduction projects."
In terms of Cabot’s overall position, Prevost added: "While the current market situation is sobering, we anticipate that our earnings and cash flows in the first half of fiscal 2009 will be helped by lower carbon black raw material costs. Cabot remains a strong company with leading global positions in our key businesses, robust financials and strong liquidity. We have substantial future growth opportunities, remain committed to our long-term technology projects and continue to invest prudently in our new businesses. All of these factors position us well to withstand these challenging times and emerge a stronger company." (Tyres & Accessories/Staffordshire, U.K.)