Occidental Closes a Chemical Factory
Occidental Petroleum Corp., the fourth-biggest U.S. oil and natural-gas producer, said Wednesday that it shut down its vinyl resins factory in Pottstown, Pa., which employed 200 people. The closing reduced fourth-quarter pretax profit by about $53 million.
A write-off of production facilities using mercury cell technology reduced fourth-quarter pretax profit by an additional $12 million, the Los Angeles company said.
The unprofitable vinyl resins business represented about 2.5% of Occidental’s chemicals sales, company spokesman Larry Meriage said.
Occidental joins companies such as BP, Europe’s largest oil concern, that are closing chemical plants that aren’t making a profit. BP said on its website last month that it would close its Linear Alpha Olefin production facility in Pasadena, Texas, by the end of this year.
“They’re cleaning things up,” said Jim Halloran, who helps manage $33 billion at National City Private Client Group in Cleveland, including 519,000 shares of Occidental. “They’re going to end up being more efficient.”
Occidental is closing the Pennsylvania plant to focus on its profitable chloralkali and polyvinyl chloride business, Meriage said. The chemicals unit, which accounts for about one-third of Occidental sales, more than doubled its profit in the third quarter to $137 million.
Occidental said it also would report pretax costs of about $76 million in the fourth quarter to increase its environmental remediation reserves, provide for litigation matters and increase self-insurance reserves.
Those fourth-quarter costs were partially offset by a tax credit of about $27 million for settlement of income tax audit issues, the company said. Combined, the costs and credit reduced fourth-quarter after-tax earnings by about $65 million, or 16 cents a share, Occidental said.
Shares of Occidental fell 31 cents to $55.61 on the New York Stock Exchange. The statement was issued after the end of regular trading.