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Koppers Inc. to Shut Down Phthalic Anhydride Production in Stickney

In a significant operational shift, Koppers Inc., a subsidiary of Koppers Holdings Inc. (NYSE: KOP), has announced plans to discontinue its phthalic anhydride operations at the Stickney facility in Illinois. The closure, set for mid-2025, comes as a response to the increasing financial demands involved in production that no longer align with market forecasts.

The Reason for Closure

The decision impacts approximately 25 employees and stems from the need for substantial near-term capital investment, which has become economically unfeasible given the projected market conditions. Koppers has identified a significant drop in the profitability of phthalic anhydride manufacturing due to a reduction in the availability of its key raw material—naphthalene. This change has forced the company to rely more on costly third-party feedstocks.

Koppers anticipates a gradual reduction in the production of phthalic anhydride over six months leading up to the closure as they work to fulfill existing contract obligations. Additionally, this move is expected to enhance the environmental profile of the site, with anticipated emissions reductions of 50 to 70 percent for regulated air contaminants.

Financial Implications

The strategic cessation of production will lead to pre-tax charges ranging from $51 to $55 million through the end of 2026. This includes both cash expenditures and non-cash charges, highlighting the financial restructuring Koppers is initiating. Approximately $28 million of these charges will reflect non-cash impacts with the remainder allocated for plant decommissioning processes including waste disposal and demolition costs.

Koppers has incorporated anticipated operational and capital expenditure savings into their 2025 goals, which aim for an adjusted EBITDA of $300 million along with planned capital expenditures of $65 to $75 million. The careful evaluation and realignment of business operations demonstrate Koppers' commitment to maintaining financial health amid changing market dynamics.

Focus on Core Strengths

Koppers CEO Leroy Ball emphasized the importance of adapting and focusing on core business strengths. In a statement, he remarked, "The decision to close the phthalic anhydride plant demonstrates our ongoing willingness to critically assess our portfolio and pivot from underperforming businesses when it is clear that improvement is not on the horizon."

Ball also acknowledged the dedication of employees who have contributed to the company’s legacy, assuring them that the transition will be handled with care and support. He expressed a commitment to enhancing the company’s competitive positioning by redirecting efforts towards healthier markets.

Future Outlook

Despite the challenges posed by this closure, Koppers plans to maintain existing operations at the Stickney facility related to coal tar distillation, which is crucial for producing products like creosote and carbon pitch. This focus aims to preserve the operational prowess of the Stickney site, employing its resources more efficiently.

Koppers Holdings Inc. maintains a strong market presence as an integrated global provider of essential treated wood products and carbon compounds, focusing on sustainability and innovation in the industry. The company is poised for a future of growth propelled by a strategic realignment of its operations toward more profitable ventures.

For additional inquiries and updates, media representatives can reach out to Koppers' Investor Relations. This proactive approach to restructuring highlights Koppers' commitment to protecting its future by ensuring operational efficiency while aligning with environmental standards.