04 May 2005 10:45 [Source: ICIS news]
LONDON (CNI)--German specialty chemicals company Degussa on Wednesday blamed high raw material costs plus economic weakness and the euro's strength for a 7% slide to Euro204m ($263m) in first quarter earnings before interest and tax (EBIT).
Group net income after minority interests was down 20% to Euro72m from Euro90m in the first three months of last year.
The profits decline came despite a 3% rise to Euro2.8bn in first quarter sales. After adjustment for exchange rate movements, sales rose 4%.
In announcing its 2004 financial results in March, Degussa confirmed that it was able to pass on only some of the rises last year in key raw materials such as crude oil and naphtha. The first quarter results have further illuminated the direct impact this has continued to exert on margins and profitability.
However, in disclosing outline first quarter figures at Degussa's annual shareholders' meeting in Dusseldorf, Germany, Felcht added: "Despite the slow start, we are confident that we can offset the sharp hike in raw material costs by raising prices in the coming quarters. Assuming a satisfactory economic trend, we expect to report a slight rise in sales and EBIT in 2005."
Degussa publishes its first quarter results in full next Wednesday (11 May).
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