The factory in Podari was opened in spring 2022, following an investment of EUR140 million, of which EUR 40 million came from EU funds.
“After a careful review of all the strategic options, we have decided to close the Podari operation. We will work closely with employee representatives in Romania and Germany and are committed to finding solutions that are most socially responsible. For a company that focuses as much on innovation as we do, it is imperative to take firm decisions when a project does not fulfill expectations and to execute even more rigorously on our sustainable growth strategy,” said Conrad Keijzer, Chief Executive Officer of Clariant, as per a statement published on Clariant website. The company has a market capitalization of EUR4.4 billion.
Media agency Thomson Reuters reported that Clariant had announced 120 job cuts along with the closure of the Podari facility, in southern Romania, while another 50 would be cut at its biofuels and derivatives operations at Straubing, Planegg and Munich in Germany.
Podari was designed to convert 250,000 tons of straw into cellulosic ethanol, a product used to make laundry detergents, cleaning agents and products used in industry and personal and home care. But the facility, opened by Clariant in 2021, ran up losses after technical problems such as bottlenecks meant its production never reached full capacity, Clariant CEO Konrad Keijzer told reporters.
“We had a 50,000 ton capacity plant and couldn’t get it to run anywhere close to capacity. The economics were not there. The demand for second generation biofuel is there, the commercial side of this business case is very attractive and remains very attractive. “There is a strong demand, but we had technical problems,” he said.
Podari had run up losses of 77 million Swiss francs ($88.06 million) since the third quarter of 2022, said Chief Financial Officer Bill Collins.
Clariant has also completed a preliminary financial assessment of the impact of this closure, as summarized in the table below. The company has concluded that restructuring costs and provisions relating to the closure and downsizing of approximately CHF60 – 90 million, impacting EBITDA, will be incurred in December 2023. In addition, further impacts of approximately CHF110 million will be incurred at the EBIT level, including a non-cash impairment to the current asset value of the Podari plant and other remaining assets.
These amounts will mainly be booked in December 2023 and will therefore be reflected in the full year 2023 results, due to be announced on 29 February 2024. Clariant anticipates a cash impact relating to the closure costs of approximately CHF110 – 140 million in full year 2024. Additional costs of maintaining required capabilities relating to the technology licenses of CHF10 – 15 million are anticipated in the full year 2024.