Ciba’s Q3 profits down 2.5% on raw material costs

06 November 2007 10:31  [Source: ICIS news]

MUMBAI (ICIS news)--Ciba posted a 2.5% year-on-year drop in third-quarter operating income to Swiss francs (Swfr) 150m ($131m) on the back of high raw material costs, the Swiss specialty chemicals producer said on Tuesday.

The firm's third-quarter net sales rose 4% to Swfr1.6bn driven by growth in Asia and North America, though European sales were flat from the same period a year ago, the company said.

"The high levels of raw material costs are being counteracted with selective sales price increases and further product pruning to strengthen the portfolio," Ciba's chief operating officer Brendan Cummins said.

Meanwhile, Ciba’s nine-month operating profits rose 2.1% to Swfr423m, with the plastics additives, and water and paper treatment segments delivering good results, the company said, adding net sales rose 3% to Swfr4.9bn.

"We are expecting our full-year operating income margin to be higher than in 2006, however we do not expect it to reach the targeted improvement of around 1%," said Ciba CEO Armin Meyer.

Ciba's plastic additives division saw net sales rise 2.3% for the first nine months of 2007 to Swfr1.6bn, with strong growth coming from the lubricant additives and personal care businesses, it added.

Net sales at the water and paper treatment division rose 5% to Swfr1.9bn, driven by strong growth in all regions and led by Asia, the company said.

Sales at its coating effects segment increased 1% to Swfr1.4bn, with good growth in the company's plastics and digital printing businesses, it said.

"The company continues to withdraw from low margin product ranges in order to further strengthen margins," Ciba said.

For the 2007 fiscal year, the company expected to incur around Swfr100m of restructuring charges related to its operational agenda and achieve Swfr60m-70m of savings, it added.

The operational agenda programme was making good progress in streamlining and simplifying operations, while reducing the company’s cost base, Cummins said.

"The new anti-oxidant plant in Singapore is on track to begin production in March 2008 and as a result, will strengthen the company’s cost leadership position in this market," Ciba said.

The company expected no change in business conditions for the remainder of 2007.

The company's shares were up 0.18% to £55.80 at 10:00 GMT on the London Stock Exchange.

($1 = Swfr1.15)

By: Aaron Rodrigues
+65 6780 4359

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