Sydsvenska's H1 profits soar on cost cuts, efficiency boost

31 July 2002 11:22  [Source: ICIS news]

LONDON (CNI)--Nordic specialty chemicals group Sydsvenska Kemi said Wednesday its first half operating earnings after depreciation soared to SKr295m ($31.3m/Euro31.6m) from SKr113m, boosted by reduced raw material and overhead costs plus improved production efficiencies.

Sales for the six month period fell 16% to SKr3.08bn, although adjusting for the divestment of the resin operations of the former Perstorp Chemitec division the decrease was 3%. Sydsvenska Kemi attributed the decline to lower prices and changes in the product range. Sales volumes improved thanks to increased sales of oxo and specialty chemicals products.

Since Sydsvenska Kemi was not formed until the end of last June, following the acquisition of Sweden's Perstorp and Finland's Neste Oxo, all the comparable figures for H1-2001 are pro-forma.

Demand for products stabilised during the first half of 2002 following the general decline experienced during the second half of last year, said Sydsvenska Kemi, which is controlled by private equity firm Industri Kapital.

"To a great extent, the increased demand during the period was attributable to the build-up of inventory at customer level after extensive rundowns before the end of 2001 and expectations of higher prices for raw materials and products," the company stated. The oxo products business benefited from extensive maintenance shutdowns by competitors.

During the latter part of H1, raw material prices began to rise again and Sydsvenska Kemi said it was able to increase the prices of several products.

Perstorp Coating Intermediates registered stable first half sales of SKr1.29bn compared with SKr1.30bn last time. Prices declined due to lower raw material prices but volumes increased. However, raw material prices rose again towards the end of the period and prices of proprietary products grew. Profits were not provided at the business level.

Sales by the Perstorp Oxo Intermediates business climbed 2% to SKr887m, strengthened by production limitations at competitors' plants in the second quarter. Prices of both finished products and raw materials increased compared with the second half of last year.

Sydsvenska Kemi said Perstorp Performance Chemicals' first half sales rose 3% to SKr279m thanks to higher prices. Sales of formates, which are used in the leather and textile industries, improved but concrete admixtures were hit by a weak construction economy in several countries.

Perstorp Engineering Materials benefited from improved demand for compounds and engineering phenolics, although the advanced composites activities were hit by the weak telecom industry. Sales for the first six months of the year rose 2% to SKr465m.

Sales at Perstorp Formox sank 22% to SKr260m as a result of lower prices. Sydsvenska Kemi said the general economic downturn caused potential customers to be cautious about investing in formalin plants. However, there are signs of recovery, it added, and sales improved in Q2 compared with Q1. Discussions are continuing regarding new formalin projects in Asia, Europe and South America.

By: Anna Jagger
+1 713 525 2653

< previous article(ICIS Podcast: Chemical News Central 2 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly