Ashland to sell unit

During its Q4 earnings update, Ashland announced plans for a series of “portfolio optimisation actions to further strengthen the company’s resilience and improve margins and returns in this uncertain environment”. These are expected to improve adjusted EBITDA margins by about 2% and returns on net assets by 1.5-2%.

The company will divest its nutraceuticals business, which is not core to its business model or longer-term strategy. It will also optimise and consolidate the carboxymethyl cellulose and methyl cellulose industrial businesses and related capacity to improve productivity and mix, repurposing the impacted assets for other uses, and optimise the hydroxyethyl cellulose manufacturing network for greater efficiency.

These changes are expected to reduce sales by $200-225 million/year, while reducing volatility, improving focus and decreasing both working capital and maintenance capital expenditures. Ashland plans to take actions to fully offset the approximately $100 million of stranded costs and lost gross profit that is expected to result.

At the same time, the company plans to increase its investments and resources for the core growth businesses consistent with the ‘Globalise & Innovate’ strategy that it outlined at its latest Innovation Day. During fiscal year 2024, it plans to deploy an incremental $4-6 million in commercial and technical resources to support this growth.