Breaking News – Oerlikon Manmade Fibres Segment will undergo structural adaptation

Breaking News

Oerlikon Manmade Fibres Segment will undergo structural adaptation

At Oerlikon’s Investor Day the following comment was made on its Manmade Fibres Segement

The Manmade Fibers Segment is a global market leader in polymer processing and plant engineering for the production of chemical fibres. The Segment holds a market share of approximately 50 % and 22 of the 25 largest manmade-fibre producers in the world, which account for more than 60 % of filament and fibre production, are customers of the Segment. Despite current market normalization, the market fundamentals for chemical fibers are attractive, supported by strong sustainable structural growth and demand. The Segment addresses a market of CHF 2.2 billion (Oerlikon estimate based on PCI studies on fiber and polymer consummations) and benefits from growth in filament, technical textiles, geotextiles and carpet yarn (BCF) applications. Additional opportunities are seen in new applications such as nonwoven technologies used in the area of water and air filtration, and more energy-efficient and resource-effective production solutions such as recycling technologies. The Segment recently announced the formation of a joint venture with the Chinese company Huitong, enabling the Segment, as the only company in the world, to offer from a single source comprehensive industrial solutions, from the polymerization to the finished end products in the chemical fiber spinning or PET packaging industry. 

While the Manmade Fibers Segment is well-positioned to benefit from an increasing market demand in the future, the current sharp downturn in the industry, especially in China, and the ongoing weakness in the crude oil market have resulted in a need to adapt the Segment’s structure. The Segment will manage this cycle by lowering its cost base measurably by the end of 2016. These measures and operational excellence initiatives will generate important savings from improvements in productivity, and allow for an important margin contribution in a very demanding market environment. The market is not expected to recover until 2018, when China’s five-year plan is predicted to support new investments in polymer technologies; however, the Segment aims to gain an increase in market share during that period.

Structural changes and operational excellence initiatives in the Manmade Fibers and Drive Systems Segments expected to deliver gross savings of up to CHF 100 million for the Group starting from 2016, with one-time costs in the range of CHF 90 to 100 million to be incurred in 2015. Reorganization of the Drive Systems Segment and the weakness in the Segment’s end-markets will lead to a non-cash charge related to goodwill impairment of around CHF 470 million in 2015.

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