Eastman to Reduce Costs by $100 Million (3/10/09)
- Reducing base pay for U.S. employees by 5% effective March 30, 2009, with equivalent cost reductions in bargaining unit sites and locations outside the U.S.
- Implementing a global targeted reduction in force of between 200-300 employees within the next 4-6 weeks
- Reducing non-critical maintenance costs
- Reducing logistics costs
- Further reducing discretionary spending
In addition to taking actions to reduce costs, the company lowered its budgeted 2009 capital expenditures to between $300 and $350 million. The company also expects to generate approximately $100 million of cash from working capital in 2009, assuming continued difficult economic conditions and raw material and energy costs similar to current levels.
Commenting on the outlook for full-year 2009 earnings, Ferguson said, “While visibility into global demand continues to be limited, the actions we are taking to reduce costs position us to better weather the storm. Assuming a modest improvement in demand that increases our capacity utilization from the current rate of approximately 71% to between 75-80% for the remainder of the year, we expect our full-year 2009 earnings per share will be between $2.00-$3.00 excluding charges related to cost cutting actions.”
The announced cost-reduction actions will result in a first-quarter 2009 pre-tax restructuring charge of approximately $30 million.
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