By Tess Stynes
Sensient Technologies Corp. /zigman2/quotes/203464885/composite SXT +0.71% unveiled plans to further reduce its costs in an effort to improve profitability and margins within its flavors and fragrances segment.
The company's board approved a 9% increase in the company's dividend to 25 cents a share. Sensient also unveiled plans to repurchase as much as an additional 2 million shares, or about 4% of the total outstanding.
The latest restructuring program will include the elimination of some operations, consolidation of plants and improvements in efficiencies with aim of generating annual costs savings of between $20 million and $25 million.
The moves follow pressure from an activist shareholder. Last month, The Wall Street Journal reported that Connecticut hedge fund FrontFour Capital Group LLC has nominated candidates for four seats on Sensient's board. The activist investor has pressed for changes at its fragrances business and an increased stock buyback, the Journal said.
"It is clear that shareholders want us to continue to execute our existing strategy and to take advantage of opportunities to grow and improve the business and drive out costs," said Sensient President and Chief Executive Paul Manning in a statement. "I am very pleased by the level of support that shareholders have expressed for Sensient's management and its ongoing strategy."
The Milwaukee-based chemicals company makes scents, colors and flavors used in perfumes, cosmetics and food processing.
The restructuring plan follows another one that the company completed last year, resulting in annual cost savings of about $12 million.
Under the latest revamp, Sensient anticipates pre-tax charges of about $90 million, including cash charges of less than $25 million. Sensient plans to provide more details when it releases its first-quarter financial results.
Shares were trading at $54.44 recently, up 3.2%
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