Q1 brings substantial boost to Hoechst/Bayer

05 February 1994 00:00  [Source: ICB]

GERMAN CHEMICAL giants Hoechst and BASF reported substantial improvements in their results in the first quarter of 1994. At Hoechst, pre-tax profit was up 16% to DM506m ($298.6m) from DM436m. The company said the turnaround was fuelled by an improvement in foreign demand, especially from the US. While business also picked up in some European markets, Germany remained depressed.

Group sales rose 10% to DM12bn from DM10.9bn, but Hoechst said a third of the increase was due to the consolidation of parts of Schering's agrochemicals business, now included in the joint venture AgrEvo, in which Hoechst holds 60%. Foreign sales rose 14% while the domestic increase was less than 1%.

With the exception of polymers, down 0.9%, all of Hoechst's six divisions reported higher sales in the first quarter. Manmade fibres rose 13%, health 11%, chemicals and dyes 8% and the technical division, which includes gases and contracting, increased its turnover 6%. The 50% surge in agrochemical sales reflects the AgrEvo consolidation.

Bayer reported a similar improvement with pre-tax earnings up 18% to DM755m from DM640m on the back of a 6% rise in turnover to just under DM11bn.

Parent company Bayer AG saw its earnings grow more than 19% to DM430m on sales that rose 2.5% to DM4.6bn.

The company said the earnings turnaround was largely due to the success of its ongoing rationalisation scheme, adding that the 'more favourable cost structure' was particularly visible in Europe, where sales were up 2% on the whole.

The improvement in turnover is attributed for the most part to a 5% increase in volumes, as selling prices dipped 2%, and favourable exchange rates.

As at Hoechst, the higher Q1 sales reflect an upturn in foreign demand. Group companies outside Germany expanded their sales by 9.5% to DM7.1bn while domestic sales advanced by just under 1% to DM3.9bn. Particularly strong sales growth in Italy, the UK and the Benelux compensated for lower turnover in France and Spain, the company noted. Bayer said all corporate divisions profited from the better business situation.

Sales increases ranged from 2.5% for agrochemicals to 8.5% for polymers. Turnover in industrial products rose 8.4%, organic products 7.9%, healthcare 6.4% and imaging technologies 3.6%. Bayer said the trends in Q1 bear out the optimism expressed by chairman Manfred Schneider, that earnings will improve by 15% to 20% in 1994.

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