Rhodia's cost-cutting pays dividends in 1999

07 February 2000 00:00  [Source: ICB]

Rhodia is bullish about its medium-term future, with 1999 net profits higher than initially expected at q227m ($222m), up on q116m in 1998.

Overall sales stagnated through the year at q5.52bn, due to a 5.6% decline in the first half and a pickup in the second half, which saw volume growth in a more amenable economic environment. The pre-tax margin increased to 15.1% as the group's cost management programmes continued. These have saved q196m.

Consumer specialities' sales increased by 5.2%, pulled along by strong volumes in food phosphates and surfactants in the US. Industrial specialities posted a 14% increase in volumes. Polyamides were helped by strong demand in engineering plastics and textile yarns. A 6% price increase, and volumes up by 1% on the previous year contributed to a sales growth of 21.5%. Service and specialities posted stable sales.

Last year, the group divested non-core businesses generating q150m and this process should continue this year. The Brazilian Rhodiaster polyester business is top of the list and the company wants a better price than was offered last year.

With the synergies to be developed from Albright & Wilson, and better control of capital, Rhodia wants to double the 1999 net income to q450m in the medium term. The company wants return on capital employed to be 14%, and sales growth of 2% above GNP.

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