Sydsvenska Kemi '02 pfts soar to SK536m on lower costs

14 February 2003 17:33  [Source: ICIS news]

LONDON (CNI)--Lower costs and increased production efficiency helped Nordic specialty chemicals company Sydsvenska Kemi more than double operating profits last year to SKr536m ($63m/Euro58m) from Euro221m in 2001.

The firm, which is backed by venture capitalist Industri Kapital and comprises the former chemicals operations of Finland's Neste Oxo and Sweden's Perstorp, said Friday that earnings were improved by around SKr170m through lower raw material costs, increased production efficiency and lower overheads.

Sydsvenska Kemi’s sales in 2002 were, however, down 15% at SKr6.00bn. Adjusted for the divestment of the former Perstorp Chemitec division’s resin operations, the decline was 2%. Lower prices accounted for minus four percentage points (due to lower raw materials prices and changes in product mix). Exchange rates effects accounted for minus three percentage points. Higher volumes contributed plus five percentage points as sales of oxo and specialty chemicals products increased.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 33% to SKr1.12bn. Pre-tax earnings totalled SKr178m and net income was SKr37m; comparable figures for 2001 were not available.

In the fourth quarter, operating profits rose 69% to SKr86m due to volumes increases and productivity improvements. Sales were, however, down 13% at SKr1.41bn; volumes were higher, especially for oxo products and specialty chemicals but were offset by lower prices and a stronger Swedish krona. EBITDA grew 18% to SKr228m. Pre-tax income in Q4 was SKr30m, compared with a loss of SKr258m in Q4-2001. Net losses were reduced to SKr2m from SKr277m.

In the specialty chemicals division (Perstorp Coatings Intermediates, Perstorp Oxo Intermediates, Perstorp Performance Chemicals and Perstorp Formox), full year EBITDA gained 46% to SKr1.00bn. Sales fell 2% to SKr4.91bn; volumes grew by 6% while currencies and prices each had a negative effect of 4%. In Q4, the specialty chemicals division’s EBITDA jumped 45% to SKr189m on sales up 4% at SKr1.16bn.

In Perstorp Coatings Intermediates, sales were up 5% at SKr590m in Q4. They fell 1% to SKr2.46bn for the full year, as lower raw-material prices and the declining dollar exchange rate led to lower product prices. Volumes for basic polyols rose slightly while those for specialty polyols increased sharply.

Margins increased, mainly due to lower costs that resulted from the ongoing efficiency programme. The price of several raw materials rose sharply during the second half because of escalating uncertainty in the world at large, said Sydsvenska .

The favourable performance of specialty polyols continued in 2002. BisMPA, a new product, was launched in the US and Asia during the year and sales of the specialty polyol Boltorn rose sharply. Capacity for di-TMP, which is used in high-tech resin systems, was expanded to satisfy growing demand, said Sydsvenska.

In Perstorp Oxo Intermediates, sales grew 8% to SKr1.79bn for the full year and 18% to SKr433m in Q4. There was favorable demand for all products during the year, particularly in H1, resulting in a healthy volume trend and full capacity utilisation. Margins rose as the favourable trend for specialty products continued and sales for other products were robust.

Sydsvenska said demand for oxo intermediates remained favourable during the fourth quarter, particularly in Asia. During the year, the business launched a new film former for water-borne paints and Peraflex, a new product range comprising environmentally compatible softeners, mainly for polyvinyl chloride (PVC).

In Perstorp Performance Chemicals, sales grew 0.6% to SKr533m for the full year but fell 8% to SKr122m in Q4. Margins improved, especially for formats, due to price increases and a changed customer structure. In the concrete admixtures segment, sales of several products were adversely affected by the weak conditions in the European construction industry, particularly in Germany. Turnover in specialty (powder) products continued to rise. Volumes in the food & feed unit were flat. Sales of ensilage agents were favourable, despite dry summer weather in Scandinavia.

However, demand for Perstorp Performance Chemicals’ products dipped slightly during the fourth quarter, due primarily to lower volumes of formates and the depreciation of the US dollar.

In the Perstorp Formox business, sales fell 11% to SKr532m in 2002 and 9% to SKr120m in Q4. The annual decline was due entirely to lower price levels, mainly for intra-group deliveries of formaldehyde. Demand for formalin plants was limited due to the general business climate. During the year, an order for a new formalin plant in Asia was received. Sales of formalin catalysts were favourable, despite the weak business climate, and Perstorp Formox defended its positions in the international market. In addition, sales of products in the new environmental catalyst segment grew sharply from a low level.

In the materials technology division, EBITDA grew 25% to SKr80m in 2002. Sales were up 3% at SKr902m, despite negative exchange rate effects of 3%. Margins also increased, mainly because of productivity improvements and changes in the supply of raw materials.

The increased sales were attributable to higher volumes for the automotive industry and the capture of market share by offering products that replace metals in advanced applications. Sales of amino compounds and products for communication satellites in the advanced composites segment continued to be adversely affected by the weak conditions in the construction and telecommunications industries respectively.

In Q4, material technologies EBITDA fell 13% to SKr20m. Sales rose 7% to SKr226m, thanks to new customer applications and the acquisition of Rogers’s moldable composites operations in September.

By: Russell Ong
+44 208 652 3214

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