New Leadership at Syensqo: Mike Radossich Faces Key Challenges Ahead

As Mike Radossich prepares to take the helm at Syensqo in January, he steps into a complex landscape marked by pressing challenges. In the wake of its split from Solvay, which has seen its stock value increase, Syensqo has struggled, with its shares plummeting by 25% since being independently listed on December 15, 2023. Investors remain skeptical about the company’s promise of innovative growth in specialty chemicals, a sector that is expected to yield higher margins.

One of Radossich's primary objectives will be to enhance shareholder value. Analysts have suggested that a secondary listing on Wall Street could be a strategy to address this undervaluation, particularly given that a third of Syensqo's revenue is generated in the U.S. However, the effectiveness of this move remains uncertain.

Operational results have been underwhelming since the separation, influenced by external factors such as the ongoing war in Ukraine and rising energy costs. Specific challenges for Syensqo include production issues exacerbated by a Boeing strike, which has disrupted a key segment accounting for 18% of its €6.5 billion revenue. As Radossich, who joined Solvay through the acquisition of composite company Cytec a decade ago, looks ahead, he must navigate these setbacks while also addressing the broader impacts of the green transition on the company’s growth platforms.

Syensqo has identified several promising areas linked to sustainability, including lightweight composites and battery technologies. However, these sectors have encountered setbacks, particularly with the rise of cheaper battery alternatives that have overshadowed the company's proprietary materials. The potential regulatory scrutiny on certain chemical products may also pose challenges, although there is hope for exemptions for battery technologies.

To improve profitability, Radossich may need to consider divesting less lucrative divisions, such as the oil and gas chemicals sector, which has struggled to attract buyers due to low margins. The aroma division, which includes vanillin, may also present an opportunity for a profitable sale. Moving forward, Radossich's leadership will be crucial not only in addressing these immediate financial hurdles but also in positioning Syensqo for sustainable growth amidst evolving market dynamics.