Huntsman (HUN) to Cut Titanium Dioxide Capacity in Europe

Huntsman Corporation (HUN) is looking to cut its titanium dioxide (TiO2) capacity in Europe by roughly 100,000 tons, representing 13% of its capacity for the region. The Utah-based chemical maker said that the move will deliver around $35 million of annual savings.

Huntsman is planning to shutter certain operations at its Calais site in France as part of the move. The company plans to close the “black end” manufacturing operations (responsible for the start of TiO2 production process) and ancillary activities during this year.

The proposed actions, which came in response to the recent weakening of industry conditions, will be negotiated in full consultation with the company’s employees and representative groups. The company expects that these actions will allow it to improve its competitiveness and better address customer needs as it is looking to build a market leading pigments and additives business.

The latest announcement is in addition to the plans Huntsman divulged in Dec 2014. The company earlier said that it is planning to cut roughly 900 positions (around 8% of its workforce) as part of its efforts to improve the competitiveness of its pigments and additives business. The move is expected to allow it to achieve cost savings of around $130 million by mid-2016.

Huntsman recently announced that it will increase production capacity at its world-scale polyetheramine facility in Singapore by 25,000 tons, taking the total capacity to 50,000 tons. The company is investing $100 million for this expansion project at its Jurong Island facility with constructions due to begin in first-half 2015 and expected to complete by second-half 2016.

Huntsman has the broadest specialized pigments portfolio in the industry following its acquisition of Rockwood Holdings’ performance additives and TiO2 pigments businesses.

With the acquisition, Huntsman is now well placed to better serve its customers through a broader range of products. The acquisition has also offered the company an attractive opportunity to unlock value within its pigments business. The buyout is expected to offer meaningful cost saving opportunities.

Huntsman currently holds a Zacks Rank #4 (Sell).

Other companies in the chemical industry worth considering include Innophos Holdings Inc (IPHS), Air Products & Chemicals Inc. (APD) and Olin Corp. (OLN). While Innophos holds a Zacks Rank #1 (Strong Buy), both Air Products and Olin retain a Zacks Rank #2 (Buy).