On Wednesday, December 10, 2008, Cabot Corporation issued a press release indicating that it expects to report significant volume declines for the first quarter of FY 2009, which ends December 31, 2008. In particular, Cabot President and CEO Patrick Prevost indicated that quarterly rubber black volumes would be 20-30% lower in 1Q FY09 than in the same quarter last year. Responding to the slowdown, Prevost indicated that Cabot expected to curtail its production by as much as 40% and to implement operational and structural adjustments to reduce operating costs. The release did not specify where or in what business segments these production curtailments would be implemented. Cabot will report its quarterly results on January 28, 2009.
The main text of the press release is below. The link is here. An Associated Press story on the release is here.
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Cabot Corporation (NYSE: CBT) today announced that it expects to report significant volume declines for the first quarter of fiscal 2009 and is taking a series of aggressive actions to address continuing market challenges.
Patrick Prevost, Cabot’s President and CEO stated, “Global weakness in the tire, 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. First quarter volumes in our Rubber Blacks, Performance Products and Fumed Metal Oxides Businesses are expected to be 20-30% lower than in the same period last year.”
Prevost continued, “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. 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 annualized 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.”
“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,” concluded Prevost.
The Company expects to announce earnings for the first fiscal quarter of 2009 on January 28, 2009 and discuss results with shareholders at its earnings teleconference on January 29th.