Sydvenska Kemi 9 mos op pfts down 30% to SKr165m

21 November 2001 16:47  [Source: ICIS news]

LONDON (CNI)--Nordic specialty chemicals group Sydvenska Kemi reported on Wednesday a 30% slump in operating profits for the first nine months, blaming lower margins resulting from the weaker business climate and high raw material prices.

Sydvenska Kemi, which combines the specialty chemicals businesses of Sweden's Perstorp and Finland's Neste Oxo, reported pro-forma profits* of SKr165m ($16m/Euro18m) compared with SKr236m during the January to September period last year.

Sales were up 8% to SKr5.45bn, with reduced volumes outweighed by higher product prices and currency effects.

Third quarter operating profits fell by 34% to SKr44m on sales down marginally at SKr1.76bn. After net financial charges of SKr121m, of which net interest expense was SKr109m, Sydvenska made a net loss in the July to September period of SKr87m.

Sydvenska, which is backed by European private equity capital group Industri Kapital, said the general business climate deteriorated during the third quarter, leading to reduced demand for several products.

"Raw material prices remained at a relatively high level during the third quarter, although initial signs of a downward trend became noticeable towards the end of the period, which will have a favourable effect on the group's margins," it said.

Sydvenska, which plans to merge with Finnish formaldehyde-based resins producer Dynea and Finnish chemicals company Kemira, said there was considerable potential for future profit improvements. It said the integration of Perstorp's and Neste Oxo's operations was initiated in the third quarter and a more effective organisation will be fully implemented during the beginning of 2002. The new organisation will be based on the following six business areas: resin and coating intermediates; performance chemicals; chemical intermediates; Perstorp Formox; Perstorp Composites; and Perstorp Chemitec.

*Pro-forma profits for 2000 have not been adjusted for the effects of purchases from German companies Degussa-Huls and Erkner, acquired in May and June last year respectively. Third quarter figures are completely comparable.

By: Neil Sinclair
+44 20 8652 3214

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