Ciba Q1 op income up 23%, flags higher sales

03 May 2007 07:28  [Source: ICIS news]

SINGAPORE (ICIS news)--Swiss specialty chemicals firm Ciba on Thursday posted a 23% year-on-year rise in first quarter operating income before restructuring and expects sales for 2007 to rise while planning to trim 2,500 jobs by 2009.

“Business conditions in 2007 are expected to remain similar to those in 2006, with raw material costs remaining stable at a high level,” it said in a statement.

The company has targeted a 3-4% average annual sales growth rate in local currencies, with a Swfr400m-500m ($330.6m-413.2m/€242.4m-250.4m) improvement in cost structure by 2009.  

As a result of its efficiency programme, Ciba expects operating income margin to increase by 1% of sales per year in 2007 and 2008, with an accelerated improvement thereafter. 

Free cash flow is also expected to increase substantially from 2008, the company said, adding that around 2,500 fewer positions should be required by 2009.

The company recorded first quarter operating income of Swfr134m compared with Swfr108m in the same quarter the year before. 

This was due to savings from the firm’s efficiency programme as well as increased contribution from its coating effects division and high-growth products such as ultraviolet filters for personal care, said Ciba.

First quarter sales of €1.66bn were 3% higher in Swiss francs and local currencies than the first quarter of 2006, led by growth in Europe, Asia, Central and South America. 

Sales in the US, however, were dampened by weaknesses in the construction, paper and automotive industries. 

Operating income margin before restructuring in the company’s plastic additives and coating effects rose to 15.7% from 13.9% in 2006 and 13% from 11.4% in 2006 respectively. 

In the company’s water and paper treatment, operating income margin before restructuring grew 2.4% to 1.9%. 

Action was being taken in the paper business, in particular, to significantly improve profitability levels, said Ciba.

First quarter net income from continuing operations before restructuring rose 32.9% to Swfr79m for the first quarter. 

In 2006, the textile effects and masterbatch businesses were divested and the associated results were reported under discontinued operations. 

($1 = Swfr1.21, €1 = Swfr1.65)

By: Jeanne Lim
+65 6780 4359

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