15 February 2007 08:47 [Source: ICIS news]
By Florence Tan
SINGAPORE (ICIS news)--Akzo Nobel on Thursday reported a more than doubling in fourth quarter chemicals’ pretax profit due to stronger demand and higher prices for products and said it was close to listing the Organon business.
Fourth quarter earnings before interest and tax (EBIT) rose to €111m ($144.2m) from €53m, the Dutch chemicals group said in a statement. Revenues in the chemicals division were 12% down to €879m.
The company also said it has reached the final stages of preparing to launch an initial public offering for the Organon biosciences business in early 2007.
In its 2007 outlook, the company said the proposed separation of its pharmaceutical business will create further value for its shareholders and it is well placed to outgrow its markets and further improve the financial returns in coatings and chemicals.
"Our results show that our strategy is paying off," Akzo Nobel’s chief executive Hans Wijers said, commenting on the results.
"We delivered on our objectives for the year, including further revenues growth, stepping up our expansion strategy and creating enhanced shareholder value. Akzo Nobel is fit for the future."
In the fourth quarter, polymer, base, pulp and paper chemicals businesses turned in strong performances despite continued pressure from energy and raw material prices, it said.
However, the functional chemicals business was hit by high raw material costs and start-up problems at its monochloroacetic acid plant in Delfzijl, the Netherlands, and the ethylene amines plant in Stenungsund, Sweden, Akzo Nobel added.
For the full year, EBIT for the overall chemicals segment rose 16% to €362m from a year ago. Revenues fell 2% to €3.8bn.
Its base chemicals business turned in a record performance, driven by strong demand for chlor-alkali products. The company started up a new plant in Delfzijl which increased its capacity and marked the end of transporting chlorine by rail.
Revenues for polymer chemicals improved by almost 10% from 2005 on strong demand, higher selling prices and cost reduction measures. This was similar in its pulp and paper chemicals business where the company has opened a new plant in China to meet growing demand.
Revenues for surfactants were 2% higher than a year ago and its cost base should improve this year as restructuring activities were underway.
Akzo Nobel’s coatings segment posted an 86% rise in its fourth quarter EBIT to €78m from the same period a year ago on strong demand for its industrial activities, marine and protective coatings. Its fourth quarter revenue rose 10% to €1.5bn.
For the full year, EBIT for the segment was up 57% to €604m while revenue rose 12% to €6.2bn.
At group level, the company’s fourth quarter EBIT before incidentals rose 11% to €249m from the same period a year ago while revenues dipped 0.5% to €3.3bn.
Its 2006 EBIT rose 14% to €1.3bn boosted by growth in all segments. Revenues were up 6% to €13.7bn and net income increased 20% to a record €1.2bn.
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