Highlights:
- Substantial Growth in PO Business
- Breakthrough Urethane Technology
- Reduced Capital Program: $1.6 Billion
NEWTOWN SQUARE, Pa., May 14 /PRNewswire/ -- ARCO Chemical Company
(NYSE: RCM) has a plan in place to "build shareholder value," stated the
company's new President and Chief Executive Officer, Marvin O. Schlanger. In
his first major public address as CEO, Schlanger also told stockholders at
their annual meeting that he expects ARCO Chemical's core propylene oxide
business to grow substantially over the next five years.
"I recognize it is management's responsibility to leverage the company's
strengths and build shareholder value. And although we have had some success
recently, we have been disappointed in results over the past two years. I
believe the plan in place will change this," Schlanger said. The plan is
based on the "key elements of technological innovation, profitable investment
and continued improvement in productivity."
Schlanger, who has been Executive Vice President and Chief Operating
Officer since 1994, also acknowledged the accomplishments of Alan R. Hirsig,
who stepped down today as President and CEO after seven and a half years. "As
CEO, Al has left his indelible mark on the company by continuing the
globalization of the business and by rebuilding our plant infrastructure with
the Manufacturing Excellence initiative that he championed."
Hirsig will continue as Vice Chairman through the end of 1998. In leaving
his position as CEO, he highlighted the company's improvements in
environmental, health, and safety performance, and cited its strong record in
plant reliability. He concluded: "It has been my privilege to be CEO during
such an important period in ARCO Chemical's history. It has also been a
privilege to work with a team of talented and committed people who have
dedicated so much to the ARCO Chemical enterprise."
In his review of ARCO Chemical's technology strengths, Schlanger said the
recent development of the Impact technology represents "a major breakthrough
for producing urethane intermediates for coatings, adhesives, sealants,
elastomers, and for the footwear and furniture markets. These opportunities
are being pursued aggressively." The Impact technology also offers "lower
operating costs and dramatically lower capital for future expansion." ARCO
Chemical's practice of an advantageous and proprietary PO-based technology for
producing butanediol (BDO), Schlanger continued, "is clearly an avenue for
profitable growth" in markets such as pharmaceuticals, personal care, and
engineering plastics.
"A result of these technologies ... and our efforts to develop
differentiated derivatives is that we expect to profitably grow our PO
business by more than 800 hundred million pounds over the next five years,"
Schlanger said.
To meet the expected demand growth for PO and derivatives, over the next
five years, ARCO Chemical is also investing about $1.6 billion in
"value-enhancing opportunities," including new PO/SM and BDO plants in
Rotterdam. The company is also undertaking a number of highly cost-effective
expansions of existing facilities, including the company's Texas BDO facility.
The $1.6 billion figure is $700 million less than the $2.3 billion program
announced on December 16, 1997. "The company has become more efficient in the
use of capital and more disciplined in the selection of investments,"
Schlanger explained. Capital for future polyols expansion, he said, will be
about 25 percent of the company's historical investment cost. ARCO Chemical's
cost for building PO plants is also believed to be about "20 percent less than
the best competition."
Schlanger said ARCO Chemical remains "among the leaders in the chemical
industry in measures of efficiency," but it is still necessary to increase
returns to shareholders. Initiatives include establishing RCM, or return on
capital managed, as a primary decision-making tool; significant executive
stock ownership requirements; and revised compensation systems. He noted that
the company's dividend is the highest among its peers. Schlanger reiterated
his commitment to seek a "broad range of alternatives to build shareholder
value."
"In the future," Schlanger concluded, "I would expect to look back and see
that ARCO Chemical is a company that has delivered a superior return to its
shareholders, has a track record of increasing profitability, and has a broad
portfolio of technology-based products serving a range of markets."
Except for historical facts, this press release contains forward-looking
statements about the company's business outlook and plans. These statements
are based on certain assumptions and outcomes are subject to risks and
uncertainties. Actual results could differ materially from expected results
based on numerous factors, including the level of product demand, the cost and
availability of raw materials, changes in the competitive environment, the
achievement of cost reductions and efficiencies, the timing and scope of
technological advances, the company's ability to complete construction
projects on schedule, the overall condition of the chemical industry and other
risks detailed from time to time in the company's SEC filings, including the
company's Form 10-Q Report for the quarterly period ended June 30, 1997.
Visit the new Press Room on ARCO Chemical's website at
http://www.arcochem-news.com where you'll find its press releases, company
facts and figures, photo images, and more. To receive a press release by fax,
call 800-758-5804; use code No. 062063 (US only).
SOURCE ARCO Chemical Company
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CONTACT:
Sallie Anderson, Manager, Media Relations,
610-359-5773, or Sami Ahmad, Manager, Investor Relations,
610-359-3171, or Martin Beck, Public Affairs-Europe,
44-1628-775012, all of ARCO Chemical Company
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