Sydsvenska Kemi '03 pfts dive 36% to SKr343m; '04 seen tough

16 February 2004 13:24  [Source: ICIS news]

LONDON (CNI)--Weak markets, reduced volumes, lower margins and negative currency effects offset net higher prices to leave Sydsvenska Kemi’s operating income down 36% to SKr343m ($48m/Euro37.5m) in 2003.

 

The Nordic group's earnings before interest, tax, depreciation and amortisation (EBITDA) was down nearly 18% to SKr922m. The poorer performance was due to lower profits in the specialty chemicals business, which dominates the group’s portfolio.

 

The group’s pre-tax result dived to SKr4m from SKr178m last time. Net sales slid 4% to SKr5.74bn.

 

Sydsvenska’s downturn in fortunes for the full year was reflected in the final quarter with operating income down by almost three-quarters to SKr23m. Revenues dropped 8% to SKr1.3bn but at the pre-tax level the firm reported a loss of SKr38m from profits last time of SKr30m.

 

Looking ahead, Sydsvenska anticipates that performance in 2004 will suffer from continued weak markets although it noted that “there are signs that demand is about to improve”. The primary challenge for the group is the strength of the dollar, which will boost the competitive position of many US firms, it said.

 

Sydsvenska added that it plans to review work processes and organisational arrangements to increase efficiency. In that regard, it aims to shift more resources to marketing and customer support activities.

 

In 2003, the specialty chemicals business had EBITDA 30% lower at SKr705m on sales 6% down at SKr4.6bn. In Q4, profits dropped 42% to SKr110m on sales down 10% at SKr1.0bn. The division consists of four business areas: Perstorp Coating Intermediates; Perstorp Oxo Intermediates; Perstorp Performance Chemicals; and, Perstorp Formox.

 

Sydsvenska said that demand in 2003 fell for several basic products, especially over market uncertainty over the war in Iraq. However, sales of some specialty products increased. Overall, the net effect was a drop in volumes of 6% last year. In net terms, sales prices went up 7% but negative currencies hit revenues by the same percentage.

 

The profit margin in specialty chemicals fell by five percentage points to 15% due to higher raw materials costs, the weak dollar and relatively low capacity utilisation.

 

EBITDA in the materials technology division in 2003 was flat at SKr81m on revenues up 15.5% to SKr1bn. In Q4, profits dropped 30% to SKr14m while sales lifted 5% to SKr237m.

By: Patrick Reynolds
+44 208 652 3214

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