Weak divisional results underline Degussa's Q1 op pfts fall

11 May 2005 10:48  [Source: ICIS news]

LONDON (CNI)--Degussa on Wednesday reported weak performances from nearly all its business units, underlining the fall in group operating profits during the first quarter.

 

The fine and industrial chemicals division reported operating profits down 18% to Euro50m ($64.2m), despite a 4.1% rise in sales to Euro810m.

 

Degussa said far lower earnings were reported by the feed additives business, although demand was higher than the same period last year. This was blamed on market erosion of methionine and lysine prices. Earnings also fell in the building blocks and peroxygen chemicals units, while the C4 chemistry division managed to raise prices and increase volumes.

 

The coatings and advanced fillers division revealed an 11% drop in operating profits to Euro74m. Sales matched last year’s first quarter figure of Euro546m.

 

Higher raw material costs and price pressure in one line affected earnings in the advanced fillers and pigments business. Earnings in the coatings and colourants and the aerosol and silanes business were virtually unchanged from the same period last year.

 

Operating profits in the performance materials division fell 23% to Euro40m on sales down to Euro521m from Euro531m during the first three months last year.

 

Earnings were down in the superabsorber and care specialties business mainly due to higher raw material costs, Degussa said. Oligomers and Silicones experienced a weakening in demand and in the US dollar. Lower volumes in the food ingredients business affected earnings.

 

Operating profits in the construction chemicals division, however, rose to Euro27m from Euro24m on sales unchanged year-on-year at Euro385m.

 

Degussa said sales were low in the first quarter due to seasonal reasons. The admixture systems unit in North America, Europe and Asia Pacific reported higher demand and improvement in earnings. The construction systems unit is the Americas and in Europe saw a fall in earnings during the first quarter.

 

The specialty polymers division outperformed all the other business units, with a rise in operating profits to Euro50m from Euro43m during the first quarter last year. Sales soared 12.3% to Euro384m.

 

Strong volume growth in all business units more than offset the rise in raw material costs, Degussa said. Specialty Acrylics and Plexiglas posted higher earnings, while High Performance Polymers and Methacrylates lifted earnings considerably year-on-year, the company added.

Degussa last week blamed high raw material costs plus economic weakness and the euro's strength for a 7% slide to Euro204m 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%.

By: Hilde Ovrebekk
+44 20 8652 3214

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