Sydsvenska Kemi '01 pro-forma pfts down 26% to SKr221m

28 February 2002 18:13  [Source: ICIS news]

LONDON (CNI)--Sydsvenska Kemi, the Nordic specialty chemicals company backed by venture capitalist Industri Kapital, recorded on Thursday a 26% fall in full year pro-forma* operating profits to SKr221m ($21.2m/Euro24.1m)

Sales in 2001, however, were up 2% at SKr7.07bn, of which reduced volume accounted for minus six percentage points and price/currency effects for plus eight percentage points. These figures assumed that the chemicals operations of Finland's Neste Oxo and Sweden's Perstorp had been part of Sydsvenska Kemi since 1 January 2000.

In the fourth quarter, operating profits fell 4% to SKr51m on sales down 14% to SKr1.62bn. The pre-tax loss was SKr258m.

Sydsvenska Kemi said the general business climate deteriorated last year and uncertainly regarding the future became noticeable in September. Demand declined in virtually all markets, with the exception of China. Towards the end of 2001, low raw materials prices had a favourable effect on group margins while inventory run-downs at customer level resulted in lower volumes.

The depreciation of the Swedish currency benefited exports from Sweden and also had a positive effect on the translation of sales into the krona.

In the Perstorp Specialty Chemicals division, the demand trend resulted in a volume decline for certain products, in particular basic polyols, although special polyols remained essentially unchanged. The prices of products sold were higher due to higher feedstock costs, said Sydsvenska Kemi.

The Perstorp Chemitec division increased its sales volumes in 2001. Margins were improved as a result of productivity gains and falling raw material prices during the latter part of 2001. Earnings trend for resin operations were favourable due to improved margins for the segment's technical applications and the fact that key customers continued to show favourable results. The compounds segments continued in invest in new products and launched two new injectable grades. Construction chemicals made a modest increase in sales and implemented cost-cutting measures.

As expected, the Perstorp Formox division saw sales of formalin plants fall from the record in 2000. This resulted in lower sales although the effects on operating profits were less severe. The business received five orders for formalin plants in 2001, as well as two orders for rebuilding projects, from customers in Europe, the Americas, Asia and a first from Russia.

The Perstorp Composites division showed healthy growth, even after exchange rate effects were eliminated, although margins fell due to high costs for glass fibre and certain types of carbon fibres. There was favourable volume growth for products within engineering phenolics, which accounts for most the division's sales. A large number of new projects, for customers such as BMW, offset a general decline in the automotive industry. The second largest product group, advanced composites, showed a sharp increase in sales, driven mainly by new products for the aerospace industry and from an increase in the number of satellite projects initiated during 2001.

Sales in the Neste Oxo division were favourable and the division was able to increase margins despite market overcapacity. This was a result of its strategy to develop niche products and its ability to increase efficiency through co-operation with other Sydvenska Kemi operations. Lower raw material costs also had an impact on margins, said the company. Specialty products, whose share of the total volumes has risen to more than a third, contributed to the increased margin in the division. Sales volumes, however, declined due to a decrease in the share of exchange and trading operations.

*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. Fourth quarter figures are completely comparable.

By: Russell Ong
+44 208 652 3214

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