29 August 2006 11:49 [Source: ICB]
Firms kept reporting their first half performance through August, with Lanxess, Ciba Specialty Chemicals and Wacker being some of the bigger names.
At Lanxess, first half earnings before interest taxation, depreciation and amortisation (Ebitda) rose 18% compared to the first half of 2005 from €344m to €406m, as the focus on high-margin businesses and restructuring benefits delivered results.
'The concentration on high-margin businesses, and the fact that our corporate reorganisation is showing results sooner than expected, have positively impacted our performance,' said Lanxess chairman Axel Heitmann.
The company said in its outlook that it expected the world economy to maintain a good rate of growth in the second half of 2006, providing an environment conducive to chemical industry activity. However, it added that raw material and energy costs were expected to remain high and volatile.
Ciba reported a 9% rise in sales to SF3285m (€2.1bn/$2.7bn), and a 9% rise in gross profit to SF965m in the first in the first half of 2006. A dramatic 26% rise in the second quarter profits drove the increase.
But the firm said a further 2500 jobs would be cut to reduce costs by SF400m-500m a year by 2009 (See box).
The Swiss specialty chemicals company said higher sales volumes, improved capacity utilisation, strict management of costs, and savings from its Project Shape efficiency programme all contributed to the second quarter earnings improvement.
'Performance in the second quarter 2006 was encouraging,' said chief operating officer Brendan Cummins. 'Demand accelerated across nearly all of our businesses, and our focus on cost management and net working capital led to increased profitability and substantially improved cash flow.'
The company confirmed its full year outlook, with higher pre-exceptional operating income and sales in local currencies.
Wacker Chemie's first half Ebitda rose by 38% to €274.7m on the back of an upturn in the chemicals and semiconductor sectors, the firm said on Monday.
Sales were 24% higher at €1.63bn. But the company said it had announced to its customers that it would be targeting price increases in the second half of the year. The firm says 80% of its sales were generated outside its native Germany, with particularly strong growth in China, the US and Eastern Europe.
Ciba continues to face competitive challenges as well as higher raw material, utility and social benefit costs, says chief operating officer Brendan Cummins.
'The implementation of our Operational Agenda is our top priority to improve our overall cost structure on an annualised basis by SF400m to SF500m by 2009,' he said. 'These measures, necessary to stay competitive, will lead overall in the next three to four years to a reduction of around 2500 positions. While the majority of this reduction will occur by natural fluctuations. There will be some redundancies.'
Around 1600 will go in Europe, the US operations will lose about 600, and some 300 will go in Asia Pacific, according to chief executive Armin Meyer. Support segments will be hardest hit, but there will also be some closures of small plants the locations and activities were not disclosed.
>> For more on Lanxess: http://tinyurl.com/zkuon
>> For more on Ciba: http://tinyurl.com/zff6t
>> For more on Wacker: http://tinyurl.com/kqypb
>> For more quarterly reports: www.icis.com
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