Degussa’s final numbers

13 March 2006 00:00  [Source: ICB]

Degussa chairman Utz-Hellmuth Felcht would have preferred a better balance sheet for 2005, the group’s last before being absorbed by energy conglomerate RAG. But Degussa’s long stock market tenure ended with a net loss of €491m for 2005 after a net profit of €298m in 2004. Shareholders, including RAG (50.1%), E.On (42.9%) and the 7% free float interests had to miss their last dividend.

Speaking in Düsseldorf, Felcht tried to put a positive twist on the situation. Sales increased 9% to €11.8bn last year, he said, ‘despite difficult market conditions’. Earnings before interest and taxes (Ebit) rose 1% to €940m and the return on capital employed (Roce) widened to 9.8% from 9.4%’.

Earnings pressure came mainly from fine chemicals, hit by an €830m impairment charge. Ironically, the top performing division was construction chemicals, now being sold to BASF. Ebit rose 12%, compared with 9% for speciality polymers. Earnings on performance materials were flat, while coatings profitability slipped 12%.

Under the ‘Degussa 2008’ profit enhancement scheme, construction chemicals was identified as one of the steady performers. Felcht said the loss of the division will lengthen the timetable for the targeted €300m earnings turnaround.

RAG needed the sale to finance its takeover of Degussa, ahead of a planned 2007 IPO. Last week, it held more than 96% of equity and was preparing a squeeze-out and a de-listing.

Although the company name survived the last round of mergers that saw Hüls and SKW Trostberg disappear, it is unlikely to be favoured over an artificial name.

The role of Felcht – who walked away from Hoechst in protest at Jürgen Dormann’s break-up of the group – in the new chemicals-dominated RAG is unclear. Most think current RAG chairman Werner Müller will remain in the top slot.

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