Ingevity Corporation (NYSE: NGVT) has announced new measures to enhance the profitability of its Performance Chemicals segment. The company plans to consolidate operations at its North Charleston, South Carolina, facility by moving oleo chemical refining from its Crossett, Arkansas, plant, which will be closed in August.
This consolidation will streamline the manufacturing footprint by centralizing oleo-based and crude tall oil-based chemical refining operations at the North Charleston site, which offers potential for future growth.
“These steps are integral to our strategy for improving Performance Chemicals segment performance,” said Ingevity President and CEO John Fortson. “Relocating oleo chemical refining to North Charleston not only rationalizes our operations but also provides significant cost savings without disrupting our commercial activities. This move also keeps us well-positioned for future growth in the evolving oleo chemicals market.”
Ingevity expects to save $20 million to $25 million annually from the Crossett facility’s closure starting in 2025. Additionally, the company plans to implement corporate and business-related cost reductions to achieve approximately $10 million in annual savings by 2025.
Rich White, Senior Vice President and President of Performance Chemicals, noted, “The slower recovery in our oleo markets has prompted us to consolidate refining at North Charleston, which has proven capable of meeting both current demand and future business forecasts. The site can also expand capacity at a minimal cost to accommodate additional growth.”
The restructuring will incur about $100 million in total charges, including $65 million in non-cash asset-related costs, $10 million in severance and employee-related expenses, and $25 million in other cash restructuring costs such as decommissioning and contract terminations. Most of these charges, including 50-60% of the cash charges, are expected to be recognized by mid-2025.
Ingevity will provide further details in its second-quarter 2024 earnings webcast and conference call on August 1, 2024, at 11:00 a.m. Eastern Time. The webcast will be available on Ingevity’s investor website.
About Ingevity
Ingevity provides innovative products and technologies that purify, protect, and enhance the world. The company operates through three segments: Performance Materials, Advanced Polymer Technologies, and Performance Chemicals. Ingevity’s solutions address complex challenges in various applications, including automotive components, road technologies, and biodegradable plastics. Headquartered in North Charleston, South Carolina, Ingevity operates globally across 31 countries and employs approximately 1,700 people. Its common stock is traded on the New York Stock Exchange (NYSE: NGVT).
