Sydsvenska Kemi quadruples Q3 operating pfts to SKr155m

01 November 2002 14:54  [Source: ICIS news]

LONDON (CNI)--Higher sales volumes and productivity improvements outweighed lower product prices to give Sydsvenska Kemi a massive increase in third quarter earnings.

The Nordic specialty chemicals company announced Friday that its July to September operating profits quadrupled to SKr155m ($16.6m/Euro17.0m) from SKr44m in the corresponding period last year.

Sales, however, were down 14% at SKr1.51bn. This was due to lower prices and a stronger Swedish krone although volumes, particularly for oxo products and specialty chemicals were higher.

Sydsvenska Kemi, which is backed by European private equity capital group Industri Kapital, made a pre-tax profit of SKr47m in Q3, compared with a SKr77m loss in the same period last year.

For the first nine months of 2002, Sydsvenska's operating profits nearly tripled to SKr450m from SKr170m, thanks to lower raw material costs, increased productivity and lower overheads.

Nine-month sales, however, fell 16% to SKr4.59bn. Lower prices, which resulted from reduced raw material prices and changes in the product mix, and negative exchange-rate effects could not be fully offset by higher volumes that came mainly from increased sales of oxo and specialty chemicals products, explained Sydsvenska. 

The company said uncertainty regarding the general trend increased towards the end of Q3. This applied particularly to Europe and the US while demand for chemical products was stable in Asian markets, it added.

The Perstorp Coating Intermediates business registered an 8% fall in Q3 sales to SKr581m. Profits were not disclosed at business unit level. For the first nine months, revenues were down 3% to SKr1.87bn. Volumes in several of the business area’s products rose, while raw material prices and product prices were slightly lower. The third quarter was weaker than the second due to normal seasonal variations, combined with slightly reduced demand in September.

Continued strong demand helped boost Q3 turnover in the Perstorp Oxo Intermediates business by 10% to SKr471m. Sydsvenska explained that demand remained favourable during the quarter as prices for finished products stabilised following an upswing during the first half. Nine month sales rose 5% to SKr1.36bn; the market for oxo products was characterised by increased demand and the favourable trend for specialty products continued, resulting in a healthy volume trend and full capacity utilisation.

Perstorp Performance Chemicals sales rose 4% to SKr132m in Q3. For the first nine months, they grew 3% to SKr411m. In the US, a plant for concrete admixtures came onstream during the January-September period, contributing to the increased sales although other parts of the product group continued to be affected by weak conditions in the European construction industry.

Sales in the Perstorp Engineering Materials business fell 3% to SKr211m in Q3 but were up 1% at SKr676m for the first nine months. Sydsvenska attributed the slim January to September growth to higher sales volumes for composite materials for the automotive industry (engineering phenolics), the market for which remained stable. The higher sales volumes were countered by negative exchange-rate effects. Sales of thermoset products (compounds) and products for communication satellites in the advanced composites segment continued to be hit by weak conditions in the construction industry and telecommunications industry respectively.

Sydsvenska Kemi said the acquisition of US firm Rogers’ mouldable composites business during the third quarter is expected to strengthen positions in North American and European markets for engineering phenolics.

Perstorp Formox sales rose 14% to SKr152m in Q3 and were higher than during the two previous quarters of the year. They were, however, down 12% to SKr412m for the January-September period. Sydsvenska blamed a weak first quarter when lower prices for internal deliveries resulted from lower raw-material prices. The cautious approach to new investments in formalin plants continues, although discussions regarding projects are under way in several markets, said Sydsvenska.

By: Russell Ong
+44 208 652 3214

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