DSM puts losses to global fall in demand

14 March 1994 00:00  [Source: ICB]

DSM'S BASE chemicals and fine chemicals business division experienced a marked drop in operating results of Dfl185m ($96m) to show a loss of Dfl105m in 1993. The company attributed the decline to a worldwide decrease in demand for the most important products of the segment.

Selling prices and sales volumes for caprolactam decreased further as a result of low priced imports from eastern Europe and declining demand abroad. The melamine price fall came to a halt in the second half of the year but the overcapacity situation continued. In Q3, DSM decided to mothball one of its melamine plants, with a capacity of 50 000 tonne/year (ECN 14 March p30).

In fertilisers the trend of the past few years in Europe continued: decreasing consumption and lower prices. In response to this development the company closed down ammonia and fertiliser production capacity. As a result of these developments, chemicals and fertilisers made a substantial loss.

Fine chemicals performed satisfactorily. Fine chemicals sales remained more or less stable despite the recession, and at the end of 1993 the segment's expanded aspartame plant was taken into operation as scheduled.

The hydrocarbons and polymers business segment experienced a Dfl130m decline in its operating result to post a loss of Dfl183m for the year. DSM attributed the decline to the ongoing over-capacity situation. Demands for polypropylene grew, while the ethylene and polyethylene markets were stable and demand for engineering plastics decreased.

Polymers in particular were loss-

making due to low selling prices. EPDM rubber sales in Europe decreased as a consequence of lower demand in the automotive industry. In the US the demand for rubber increased due to the economic recovery and the upswing in automotive production.

The resins and plastics products segment saw operating profit drop Dfl51m as the effects of the European recession were painfully felt. Demand for wet coating resins decreased and the polyester compounds and mouldings market suffered from the malaise in the automotive industry, the most important outlet for these products.

By contrast, sales of powder coating resins increased worldwide. However, the company said the result of the resins segment, though positive, was unsatisfactory.

Due to hesitant consumer spending, Curver Rubbermaid Group recorded only limited growth in 1993. Its result was lower than in 1992. Fardem operated in a shrinking packaging market and was loss-making; both sales volumes and prices decreased owing to increasing competition.

Engineering plastic products sales decreased in Europe and Japan but increased in the US. Its results, too, were below the 1992 level.

The energy and other activities business segment managed to maintain its results at the same level year-on-year despite the falling price of oil.

DSM 1993 full-year results by division (Dfl)
Division	Sales	Change,%	Op profit	Change,%
Hydrocarbons/polymers	3499	(1.7)	(183)	(245)
Base/fine chemicals	2292	(20.9)	(105)	-
Resins/plastics	2409	(9.4)	(14)	(80.3)
Energy/other	176	(13.3)	183	(0.5)
Total	8040	(9.7)	(91)	-

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