27 July 2000 12:07 [Source: ICIS news]
LONDON (CNI)--French specialty chemicals company Rhodia reported on Thursday a 16% increase in first half pre-tax profits and predicted record double digit growth in net income for the full year despite the cost of its acquisitions of Albright & Wilson (A&W)and ChiRex.
Rhodia's earnings before interest, depreciation, tax and amortisation (EBITDA) rose 16.1% to Euro506m ($472m) in January to June compared with the first half of 1999. This was despite the cost of integrating A&W and restructuring charges. Second quarter EBITDA was Euro268m, up 4.7% against Euro256m in April to June last year.
The company's first half sales were 29.3% higher at Euro3.50bn, including A&W's sales from 1 April. The majority of gains were made in the second quarter when the incorporation of A&W helped boost sales, which were up 38.5% compared with last year to Euro1.96bn. First half margins increased from 14.1% to 14.5% in the same period, on a pro forma basis.
Sales of Rhodia's fine organics division rose 24.4% in H1 to Euro555m, thanks to an aggressive policy to win back market share in pharmaceutical ingredients along with strong growth in perfumery and specialties. EBITDA was up 27% to Euro89m.
The consumer specialties division saw first half sales leap 68.7% to Euro946m, chiefly thanks to A&W. Excluding A&W, sales were up 10.5%. EBITDA surged ahead 50.8% to Euro89m including A&W but excluding the acquisition it was up 12%.
Earnings at the industrial specialties division fell 4.8% to Euro79m due to increased raw material costs. The main culprit was styrene, the raw material for latex paper. Styrene prices were up 90% compared with the first half of 1999. Sales at Industrial Specialties gained 17.1% to Euro640m.
Polyamide sales progressed by 23.2% to Euro796m on the back of strong sales volumes and better prices, which offset higher raw materials costs. Profits grew 14.3% from Euro126m to Euro144m.
Rhodia's Services and Specialties division made sales of Euro473m, up 8.2% on last year. EBITDA was 22.5% higher at Euro98m. The improvement was due largely to profitability gains at Rhodia Rare Earths, which benefited from restructuring along with demand from electronics and automotive markets.
"The increase in sales across all divisions during the first half of 2000 demonstrates our determination to pursue a growth strategy," said Rhodia's chairman and chief executive, Jean-Pierre Tirouflet. "Following our acquisition of Albright & Wilson, our plans to acquire ChiRex, an American company listed on Nasdaq, a world leader in high-tech services for the pharmaceutical industry, fit perfectly with this strategy."
Rhodia confirmed that its target of reaching 15% higher earnings and sales in 2000 is still on track, despite a challenging business environment and increases in raw material costs. The company said that while the integration of A&W and projected acquisition of ChiRex in quarter four are significant changes that will impact full year results, it still expects double digit income growth.
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