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Calgon Carbon plans to cut $30M in expenses by end of 2014

| Thursday, May 2, 2013, 12:01 a.m.

Calgon Carbon Corp. plans to cut annual expenses by $30 million by the end of 2014 to boost profit, CEO Randy Dearth told shareholders on Wednesday.

The Robinson company, which produces air and water purification products, will report first-quarter earnings on Monday.

Earnings in 2012 were squeezed in part by tighter profit margins because of stiffer competition, higher raw materials costs and tepid demand in Europe, Dearth said.

Annual sales increased 2.9 percent to $142 million last year, but earnings fell 41 percent to $23 million.

“Margins, margins, margins. Our team across the globe is focused on that,” Dearth told roughly 60 people attending the meeting in company headquarters.

Dearth, who joined Calgon Carbon as chief executive in August, said the company since late 2012 has reduced costs by about $10 million annualized, mainly from operational improvements at its activated carbon plant in Mississippi and a dozen job cuts.

“I'm not a big fan of cutting heads to cut costs, but I am about finding out how you can run the company more efficiently,” Dearth said after the shareholders meeting.

The CEO doubts there would be more job cuts at the company, though he did not rule that out. Calgon Carbon employs about 1,200 people worldwide, including about 400 in Western Pennsylvania.

Calgon Carbon expects to reap savings this year through supply-chain efficiencies and by “rationalizing” its product line, or cutting about half of its product types, “to focus on those that yield the best returns for shareholders,” he said.

The moves would not close plants.

Calgon Carbon is positioned to serve a burgeoning market in North America for removing mercury from coal-fired power plant emissions, for example. That business yields higher profit margins than the company's traditional businesses of air and water purification with activated carbon, said Dearth.

Two of the four people shareholders elected to Calgon Carbon's board were independent nominees agreed upon by management and a dissident shareholder group, Starboard Value L.P., the New York-based investment firm that months earlier had threatened to wage a proxy fight.

“(Dearth's) focus is on the right areas,” especially higher-margin products, said Louis Massimo, one of the new independent board members.

“You can always get more efficient, and the company is on the right track,” said Massimo, a former chemicals company executive.

Dearth, the former CEO of global chemicals company Lanxess Corp. in Findlay, said Calgon Carbon has a “very strong balance sheet” and that he would like to expand it globally beyond concentrations in North America, Europe, Japan and parts of China.

“I'm very bullish on India and Brazil, which could provide us with some opportunities,” he said.

Thomas Olson is a Trib Total Media staff writer. Reach him at 412-320-7854 or tolson@tribweb.com.

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