Sensient initiates 'broad and strategic' restructuring program
February 11, 2013
by Eric Schroeder
MILWAUKEE — Sensient Technologies Corp., a global manufacturer of colors, flavors and fragrances, will relocate its Flavors & Fragrances Group headquarters, reduce global headcount and consolidate several facilities in North America and Europe as part of a broad and strategic restructuring program set to take place in the first quarter of fiscal 2013. The announcement came as the company reported record revenue and earnings per share in fiscal 2012.
Net income in the year ended Dec. 31, 2012, was $123,908,000, equal to $2.50 per share on the common stock, up 3% from $120,484,000, or $2.42 per share, in fiscal 2011. Revenue increased 2% to $1,430,789,000 from $995,907,000.
As part of the restructuring plan, Sensient said it will relocate its Flavors & Fragrances Group headquarters, technical groups and North American management to Chicago from Indianapolis.
“We believe that there are a number of strategic advantages to relocating this business, including giving us better access to our customers, improving our access to food industry talent, and allowing us to showcase our broad product portfolio in a state-of-the-art facility,” said Kenneth Manning, chairman and chief executive officer, in a Feb. 8 conference call with analysts. “Many of our largest customers have locations in the Chicago area and this move allows us to be closer to those customers. In addition, the proximity to a major international airport will make our new facility easily accessible for all our customers and suppliers. The central location and enhanced transportation options will also make it easier for our management team to visit customers and to access our businesses around the world.”
In addition to location, Mr. Manning said the new Chicago facility has been designed to emphasize the customer experience.
“It will include a large customer presentation area and state-of-the-art laboratories for each of our product lines,” he said. “We are confident that this facility will allow us to showcase our innovative capabilities to customers and attract and retain talented technical personnel.”
Sensient said it expects to incur personnel and moving related costs of between $12 million and $14 million over the next 12 to 18 months related to the relocation.
The second part of the restructuring plan will include the elimination of more than 200 jobs and the consolidation of several manufacturing sites during the next 12 months.
“These changes will make our operations more efficient and substantially reduce our cost structure without impacting sales and technical coverage or our manufacturing capabilities,” Mr. Manning said. “We are making these changes to position the company for even greater profitability, and we expect these programs to be completed within a year.”
In total, Sensient said it expects to incur approximately $10 million in one-time personnel related costs and $8 million of one-time non-cash costs related to the write-down of assets and other costs during the next 12 months. The company expects to reduce its annual operating costs by about $10 million as a result of the changes.