Ciba posts 4% rise in 2007 operating income

08 February 2008 07:11  [Source: ICIS news]

MUMBAI (ICIS news)--Ciba posted a 4% year-on-year rise in operating income for its fiscal 2007 to Swiss francs (Swfr) 552m ($502m/€345m) on Friday on the back of improved efficiency and reduced costs, which more than compensated for higher raw material prices, it said.

"We are seeing the results of the strategic repositioning of the company and its focused portfolio," Ciba chairman Armin Meyer said.

However, the Swiss speciality chemicals firm’s operating income including restructuring and a one-time tax item fell 6% to Swfr434m for the period ended 31 December.

Ciba’s net sales grew 2.7% to Swfr6.5bn driven by Asian growth, while it posted a net income of Swfr237m in 2007 versus a net loss of Swfr41m in 2006, it said.

Meanwhile, the company’s fourth-quarter operating income rose 10% to Swfr129m, net sales were 2% higher at Swfr1.6bn and net income was unchanged at Swfr84m from a year ago, it said. 

Plastic additives sales rose 3% to nearly Swfr2.2bn for fiscal 2007, as high demand for polymer stabilizers offset the impact of the firm’s decision to discontinue the Atmer product range in the second quarter of 2007, Ciba said.

"The lubricant additives as well as the personal care businesses showed very strong growth," it added.

Coating effects sales were 2% higher at Swfr1.8bn, on the back of good growth coming from the plastics and digital printing businesses, it said.

"The segment continued to withstand much of the impact of the slowdown in the automotive and construction sectors in NAFTA [North American Free Trade Agreement], which affected sales in the coating additives and pigments areas," Ciba said.

Coatings effects sales growth was strong in Asia and flat in Europe, it added.

Ciba’s water and paper treatment sales increased 3% to over Swfr2.5bn for the year, driven by growth in Asia and Europe, Ciba said.

The turnaround measures to restore profitability in the paper chemicals business, a new marketing and sales business model, rigorous cost control and the closure of some production units drove growth in the segment, it added.

Ciba expected 2008 to be another demanding year for the speciality chemicals sector, as the outlook for the economy was uncertain and raw material costs were expected to remain high, it said.

However, the company aimed to grow annual sales in line with GDP, and hoped to achieve a 10% increase in it operating income and a 20% jump in its free cash flow, it said.

"The key priorities for 2008 are margin management and ensuring we achieve optimal value for our products," Ciba CEO Brendan Cummins said.

The company would maintain its cost reduction efforts and continue a differentiated approach on prices and volumes, with selective price increases, as well as volume growth strategies to gain market share where appropriate, he added.

Ciba’s shares closed down on Thursday 1.79% at Swfr42.76 on Switzerland’s VIRT-X exchange.

($1 = Swfr1.10)
(€1 = Swfr1.60)

By: Divya Chowdhury
+65 6780 4359

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