Euro Finance: Ciba sticks to 2005 profits growth targets

28 November 2001 15:38  [Source: ICIS news]

LONDON (CNI)--Ciba said Wednesday it was sticking to its 2005 sales and profits growth targets despite the global slowdown.

The Swiss specialty chemicals company announced in August mid-term financial targets of average annual sales growth of 6% between 2002 and 2005, EBITDA (earnings before interest, tax, depreciation and amortisation) margin of 20% by 2005 and annual free cash flow in 2005 of greater than SF1bn. Free cash flow is targeted at over SF1bn ($599m/Euro683m) by 2005.

"There is no reason not to stick to these targets," said chief executive Armin Meyer.

Speaking here at the European Chemical Industry Finance and Investment conference,* he said the global slowdown was affecting Ciba's results, but claimed the company's restructuring efforts and business strategy were minimising the impact.

Meyer said Ciba would not be considering any large acquisitions or mergers. "We will only consider small to medium buys, below SF1bn. These will be in all core segments, but in only two areas - technology improvements and to move into new markets."

He added: "Some who took part in mergers are suffering now. We would prefer to be strong and independent rather than in a lousy merger."

Meyer admitted that Ciba's acquisition of Allied Colloids had been over-priced: "This acquisition was expensive but it was strategically good."

One new technology area which Ciba would like to move into is automotive lubricants. "With specialty additives to oil we will soon be changing the car before you change the oil!," said Meyer.

When he took over, Meyer reorganised the company into five core areas - plastic additives, coating effects, water and paper treatments, textile effects and personal and home care.

His strategy is to retain the simple structure he has created. "In today's complex global environment you must have a simple structure - what is simple works. My style is not to change strategies every year."

*The European Chemical Industry Finance and Investment conference, which concludes today, is organised by CNI's sister publications ECN and Chemical Insight and sponsored by Merrill Lynch.

By: Will Beacham
+44 208 652 3214

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