H.B. Fuller discontinues European production of insulating glass sealant

US-based H.B. Fuller has announced that it intends to exit the polysulphide-based insulating glass sealant product line in Europe by the end of 2010.
In 2006, the company expanded into the European r…

US-based H.B. Fuller has announced that it intends to exit the polysulphide-based insulating glass sealant product line in Europe by the end of 2010. In 2006, the company expanded into the European residential insulating glass market by acquiring a polysulphide-based product line, which generated net revenue of approximately USD 25 million in fiscal year 2009. Polysulfide-based products are difficult to differentiate and have essentially become commodity products. The company has therefore decided to discontinue the sale of these products in Europe and focus on more innovative technologies for this market, similar to the strategic approach it used in the US. However, the company has said that this change in Europe does not affect the company“s business in the US or any other region of the world. H.B. Fuller will, as a result, incur exit costs of approximately USD 2.2 million (USD 1.8 million after-tax, or USD 0.04 per diluted share) and non-cash impairment charges of about USD 9.2 million (USD 6.3 million after-tax, or USD 0.13 per diluted share). These figures, which are estimates, will be finalized in the next quarterly filing. The exit costs primarily consist of severance and other related charges, and will be spread across the next several quarters as the business is wound down, with USD 1.4 million of the after-tax costs occurring in the second quarter and USD 0.4 million in the second half of the year. The non-cash impairment charges, which relate to the long-lived assets created when this product line was acquired in 2006, will occur totally in the second quarter of 2010. Other than exit costs and impairment charges, the discontinuance of this product line is expected to have a modest positive impact on net income and cash flow. This decision is consistent with our long-term strategic plan and represents another step in our transformation toward a profitable growth company that thrives around innovation, value-added solutions and superior human capital, said Michele Volpi, H.B. Fuller president and chief executive officer. Exiting this business will meaningfully enhance both our growth and profitability profile in EIMEA and allow us to more effectively focus on our core market segments.