On the occasion of an update on the company’s fiscal 2023 fourth-quarter and full-year earnings on Nov. 1, Ashland said it plans to initiate portfolio-optimization actions to further strengthen its resilience and improve profitability. One of these actions will be the start of a divestiture process for the company’s nutraceuticals business.

“We are pleased with the progress our Nutraceuticals team has made to strengthen and grow the business,” commented Guillermo Novo, Ashland’s chair and CEO. “However, we have determined that it is not core to Ashland’s business model or longer-term strategy. As we saw with the sale of our Adhesive business, we believe Nutraceuticals will be better positioned to thrive as part of an organization where Nutraceuticals is a core to their model and future investment strategy,” Novo added.

In addition to the divestiture of its Neutraceuticals business, Ashland plans to take the following actions:

• Optimization and consolidation of its carboxymethyl cellulose (CMC) and methyl cellulose (MC) industrial businesses and related capacity to improve productivity and mix;
• Developing plans to repurpose the impacted CMC and MC assets to support other longer-term growth initiatives;
• Optimizing the company’s global hydroxyethyl cellulose (HEC) manufacturing network for greater efficiency;
• Increasing resources and investments to drive its higher-value “globalize and innovate” strategy.

When completed, Ashland expects these portfolio actions to result in improved adjusted EBITDA margins of approximately 200 basis-points and returns on net assets of 150 to 200 basis-points. The impact of these portfolio actions is expected to reduce annual sales by approximately $200 million to $225 million. Ashland plans to take actions to fully offset the approximately $100 million of stranded costs and lost gross profit that is expected to result from these actions.

At the same time, the company plans to increase its investments and resources for the core growth businesses consistent with the “globalize and innovate” strategy that was outlined at the company’s recent Innovation Day. During fiscal year 2024, the company plans to deploy an incremental $4-6 million in commercial and technical resources to support this growth.

"We are repositioning Ashland to further reduce our participation in lower profitability markets where we do not have strong leadership positions. We plan to redeploy assets to support productivity or growth in the new technology platforms we outlined at our Innovation Day in early September," sadi Novo. “These actions further enhance focus on our pharmaceuticals, personal care and coatings businesses and position the company well for improved performance and profitability.”