Rhodia turnaround sees Euro116m profit in '98

27 January 1999 16:41  [Source: ICIS news]

LONDON (CNI)--French speciality chemicals company Rhodia unveiled on Wednesday a spectacular Euro1.24bn ($1.07bn) income turnaround last year and forecast a 75% rise in profits during 1999.

Rhodia said its net income for 1998 improved to Euro116m from a loss of Euro1.12bn in 1997 - a turnaround of Euro1.24bn. It said the improvement followed a year of restructuring and divestments to focus on non-cyclical markets, which helped to offset more difficult trading conditions in the second half.

Jean-Pierre Tirouflet, chairman and chief executive officer, forecast that Rhodia's net result should increase about 75% to Euro200m during the current financial year (January-December).

Rhodia's operating profit improved last year to Euro334m from a loss of Euro651m, and earnings before interest, tax, depreciation and amortisation (EBITDA) increased nearly 60% from Euro473m to Euro752m.

Net sales fell slightly last year to Euro5.54bn from Euro5.8bn, but measured against 1997 proforma figures (accounting for restructuring and new corporate ties to parent group Rhone-Poulenc), the fall was slightly less as the previous year's net sales were Euro5.7bn.

There was a 2.9% drop in net revenues due to lower sales volumes during the second half. However, prices remained stable giving only a 0.2% contribution, which Rhodia said reflects the non-cyclical nature of its portfolio. The overall effect of currency exchange on revenue accounts was minimal, it said, as the fall in Asian earnings was offset by a 1.1% dollar and 2.3% sterling contributions.

On a proforma basis, Rhodia's 1998 EBITDA rose 17.7% to Euro801m following the drop in raw materials prices and productivity improvements cutting 5% from production costs.

The first six months of 1998 saw marked growth in polyamide, acetow, eco services and polyester activities, said Rhodia, However, the second half of the year brought reduced sales volumes in polyamide, rare earths and phosphates in the US. "This performance confirms Rhodia's ability to withstand economic forces and emphasises the changes it has made in its activities," it said.

The polyamide business saw EBITDA up 14% to Euro192m on a proforma basis from sales down 4.4% to Euro1.08bn. The division consolidated its upstream activities by integrating engineering plastics firm Nyltech and Novalis, a high performance fibres company. Rhodia also took minority stakes in Slovakian company Chemlon and Stilon of Poland. The company said the polyamides division now benefits from improved production capacities at more competitive prices.

The company plans in the first quarter of 1999 to dissolve the Fairway joint venture it has with Hoechst in Latin America, which will see Rhodia get the polyamide business which recorded sales of Euro147m last year. Hoechst will take the polyester business activity.

Rhodia's services and specialities division boosted proforma net sales by 2.1% to Euro887m with a 9.3% rise in EBITDA to Euro163m. The fine organics business also enjoyed higher profits. However, they rose by only just under 2% proforma EBITDA to Euro160m on sales down 4.3% to Euro992m. The division acquired UK company Holmes Chapel last year, which gives it a flexible production unit to meet the needs of current Good Manufacturing Practices (cGMP) standards. Rhodia said the business will soon be able to supply the pharmaceuticals market.

By: Patrick Reynolds
+44 208 652 3214

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 2 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly