Management changes and job cuts at Millennium Chemicals Inc. are not expected to have much impact on Equistar Chemicals LP, the polyolefins/ olefins maker that is partially owned by Millennium.
Millennium President and Chief Executive Officer William Landuyt stepped down July 21, as the Red Bank, N.J.-based firm announced that it expects to post a loss of 25-30 cents per share for the second quarter of 2003. The firm had lost 80 cents per share - or $51 million - in the first quarter, after losing $284 million for all of 2002.
Board member Robert Lee will replace Landuyt, who had led the firm since its inception in 1996.
The company also announced it is cutting 175 jobs worldwide as part of an effort to save $20 million annually. In a separate move, Millennium is moving its headquarters from Red Bank to Hunt Valley, Md., where it operates a manufacturing plant, research and development center and two sales offices. The move will be effective Sept. 1.
Like many chemicals makers, Millennium is suffering from softer demand for its products resulting from a weak economy. Its flagship titanium dioxide product line, used as a whitener in many plastics and paints, also lagged because excess rainfall in North America limited outdoor paint work.
News of the expected second-quarter loss and of Landuyt's departure sent Millennium's per-share stock price tumbling July 21 from almost $11 to less than $9. The stock recovered to close July 22 at $10.15 per share. It had been at $15 per share as recently as mid-2001.
Millennium officials said July 21 that the firm does not expect any cash contributions from the Equistar business for the remainder of the year. Millennium owns 29.5 percent of Houston-based Equistar, with Lyondell Chemical Co. owning the remainder of the partnership. Equistar is one of North America's largest polyethylene makers.
Millennium had sought buyers for its Equistar stake in recent years, but no longer is doing so, according to corporate and investor relations Vice President Mickey Foster.
``We're holding on now [to Equistar] to take advantage of the next up cycle,'' Foster said.
Equistar has struggled as well, showing a first-half loss of $195 million even though sales grew almost 25 percent to $3.2 billion, compared with the same period in 2002. First-half increases in resin pricing were offset by lower volumes and steep run-ups in the price of natural gas, Lyondell officials said in a July 24 news release.
The $195 million first-half loss for 2003 was a marked improvement over the first half of 2002, when Equistar lost more than $1.2 billion.
In an attempt to pay off almost $1.9 billion in long-term debt, Equistar has issued $775 million in senior notes this year.
The firm also recently sold its polypropylene unit in Bayport, Texas, to Sunoco Inc.
Recent industry data ranks Equistar as North America's largest maker of low density PE, with more than 18 percent of the region's total capacity. The firm also ranks third in regional high density PE capacity, with almost 18 percent, and fourth in regional linear LDPE capacity with just over 7 percent.