HÜLS GROUP
Massive restructuring scheme / Cost savings of DM 300m foreseen / PVC activities to be hived off / Meyer-Galow's visions
In line with a restructurisation scheme designed to save DM 300m in annual costs and return operations to profit by 1995, the Hüls Group (D-47564 Marl) plans to spin off its 300,000 tpa PVC activities (annual sales of DM 600m) into a separate company as of 1 January 1995, while selling its tradition-rich rubber business to Bayer AG (D-51369 Leverkusen), as of 1 July 1994.
PVC production will be shifted to Vestolit GmbH in a move that new chairman Dr. Erhard Meyer-Galow believes will improve the bottom line substantially. PVC and rubber have been among Hüls' biggest lossmakers in recent years. The thermoplastics and rubber division contributed most to the group's DM 485m operating loss in 1993, according to finance chief Ludger Viefhues. In future, the emphasis in PVC production will be on lean. The new company will employ 850 people, some 420 fewer than Hüls employs at present. Further restructuring measures will be left to Vestolit's management.
Outlining his overall strategy for a turnaround, the chairman commented that the PVC spin-off is not designed to facilitate a joint venture with another plasticsmaker, adding that Hüls now feels strong enough to survive on its own. However, he indicated that this option has not been abandoned. A JV with Norsk Hydro – previously mentioned as a potential partner – has been ruled out, as the Norwegian group is "simply seeking a captive market for its ethylene dichloride".
Other aspects of the new game plan for Hüls include the sell-off of non-profitable activities no longer considered to be core businesses, along with a slim-down of loss-making core businesses to achieve a better economy of scale. At the same time, central management is to be downsized and 131 currently identified operative businesses reshaped into new units. Among plastics activities targeted for divestment are Hüls America's polyethylene foams business and polyethylene pipe manufacturer Kunststoffwerk Höhn GmbH ( D-46562 Höhn).
At the beginning of 1994, polyolefins manufacturing was shifted to the new Vestolen GmbH (Pawikerstr. 30, D-45896 Gelsenkirchen-Buer), to be managed by Hüls' sister company, Veba Oel AG (D-45876 Gelsenkirchen). Plastics processing subsidiary Hüls Troisdorf AG (PO Box 1347, D-53839 Troisdorf), acquired in 1988 from Dynamit Nobel AG (PO Box 1261, D-53839 Troisdorf), has been sold to Rütgerswerke AG (PO Box 111541, D-60050 Frankfurt), which will continue to operate it as an independent company, known as HT Troplast. The plastics division of Hüls America also is being sold.
With these and other envisaged changes, Hüls will voluntarily forfeit DM 2.5bn in annual sales and 5,300 employees – within the 8,000 worldwide job reduction target planned for the end of 1994. Dr. Meyer-Galow's vision of Hüls in the second half of the 1990s is of a lean corporation with net earnings of around DM 800m annually. Current projections are for a rebound to DM 200-300m in 1995. In Q1 1994, thermoplastics and rubber were still in loss. The group's operating profit was positive, but the return on sales was still "not satisfactory."
READER SERVICE: Annual Report 1993 (German) Hüls AG: PIE-No. 36080.
PVC production will be shifted to Vestolit GmbH in a move that new chairman Dr. Erhard Meyer-Galow believes will improve the bottom line substantially. PVC and rubber have been among Hüls' biggest lossmakers in recent years. The thermoplastics and rubber division contributed most to the group's DM 485m operating loss in 1993, according to finance chief Ludger Viefhues. In future, the emphasis in PVC production will be on lean. The new company will employ 850 people, some 420 fewer than Hüls employs at present. Further restructuring measures will be left to Vestolit's management.
Outlining his overall strategy for a turnaround, the chairman commented that the PVC spin-off is not designed to facilitate a joint venture with another plasticsmaker, adding that Hüls now feels strong enough to survive on its own. However, he indicated that this option has not been abandoned. A JV with Norsk Hydro – previously mentioned as a potential partner – has been ruled out, as the Norwegian group is "simply seeking a captive market for its ethylene dichloride".
Other aspects of the new game plan for Hüls include the sell-off of non-profitable activities no longer considered to be core businesses, along with a slim-down of loss-making core businesses to achieve a better economy of scale. At the same time, central management is to be downsized and 131 currently identified operative businesses reshaped into new units. Among plastics activities targeted for divestment are Hüls America's polyethylene foams business and polyethylene pipe manufacturer Kunststoffwerk Höhn GmbH ( D-46562 Höhn).
At the beginning of 1994, polyolefins manufacturing was shifted to the new Vestolen GmbH (Pawikerstr. 30, D-45896 Gelsenkirchen-Buer), to be managed by Hüls' sister company, Veba Oel AG (D-45876 Gelsenkirchen). Plastics processing subsidiary Hüls Troisdorf AG (PO Box 1347, D-53839 Troisdorf), acquired in 1988 from Dynamit Nobel AG (PO Box 1261, D-53839 Troisdorf), has been sold to Rütgerswerke AG (PO Box 111541, D-60050 Frankfurt), which will continue to operate it as an independent company, known as HT Troplast. The plastics division of Hüls America also is being sold.
With these and other envisaged changes, Hüls will voluntarily forfeit DM 2.5bn in annual sales and 5,300 employees – within the 8,000 worldwide job reduction target planned for the end of 1994. Dr. Meyer-Galow's vision of Hüls in the second half of the 1990s is of a lean corporation with net earnings of around DM 800m annually. Current projections are for a rebound to DM 200-300m in 1995. In Q1 1994, thermoplastics and rubber were still in loss. The group's operating profit was positive, but the return on sales was still "not satisfactory."
READER SERVICE: Annual Report 1993 (German) Hüls AG: PIE-No. 36080.
15.06.1994 Plasteurope.com [21373]
Published on 15.06.1994