Cabot to cut production up to 40 percent in face of 'extended slowdown'

ERJ staff report (DS)

Boston, Massachusetts -- Cabot Corp intends heavily to cut output of its materials in preparation for an extended economic slowdown.

Patrick Prevost, Cabot's President and CEO stated, "Global weakness in the tyre, 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."

He added that one piece of good news is that the price of carbon black feedstocks has declined sharply. He said this would help earnings and cash flows in the first half of fiscal 200.

Cabot did not give any details of plant closures or output reductions, but said further announcements would be made at the end of January.

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Press release from Cabot