Specialty materials provider Trinseo PLC has announced the permanent closure of two facilities in Italy and the potential closure of a third in Germany, alongside an indefinite suspension of its quarterly dividend.
Trinseo PLC, a specialty material solutions provider, unveiled a plan on October 6, to restructure its European manufacturing footprint. The most immediate and definite action involves the permanent closure of Trinseo's methyl methacrylate (MMA) production operations at its Rho, Italy facility, and the adjacent closure of its acetone cyanohydrin (ACH) production in Porto Marghera, Italy. ACH is a key precursor used to manufacture MMA.
In a separate move, Trinseo has initiated an information and consultation process regarding the potential closure of its polystyrene (PS) production at its Schkopau, Germany site. The intention is to consolidate the remaining PS production into the company's Tessenderlo, Belgium location. Should an agreement be reached with the Works Council of Trinseo Deutschland GmbH, this consolidation is expected to add $10 million in annualized profitability improvement.
The company stated that the Italy closures, which are anticipated to be completed by the end of the year, will see Trinseo shifting to sourcing MMA feedstock from third-party producers. This change is expected to significantly improve the overall cost structure for its downstream products. Importantly, Trinseo will retain its polymethyl methacrylate (PMMA) operations at Rho, along with its recently opened depolymerization pilot facility, signaling a strategic focus on more specialized and sustainable materials within that site.
Trinseo projects that the Italian closures will yield an annualized profitability improvement of approximately $20 million and an annual reduction in capital expenditures of about $10 million. However, the restructuring will incur substantial pre-tax charges ranging from $80 million to $100 million for employee, asset-related, and decommissioning costs. Associated cash payments are anticipated to total $40 million to $50 million, with the majority expected by the end of 2028.
CEO Frank Bozich acknowledged the difficult nature of these decisions, emphasizing the impact on employees: "These decisions are never easy. With each one we know the livelihoods of colleagues and their families are being impacted." He affirmed the company’s commitment to safety and a respectful transition aligned with local regulatory requirements.
In addition to the operational changes, Trinseo’s Board of Directors has voted to indefinitely suspend the company's quarterly dividend of $0.01 per share, effective immediately. This financial measure is expected to save approximately $1.5 million annually, further enhancing the company's cash flow generation for focused capital allocation.
