Slowdown provides backdrop for Europe '07 results

08 February 2008 16:26  [Source: ICIS news]

LONDON (ICIS news)--Credit Suisse expects to see highly variable full-year 2007 results from Europe’s major chemical producers with the global slowdown in mature markets providing an important part of the backdrop.

 

However, company-specific issues like contract wins and the impact of restructuring and acquisitions were seen as more important drivers in the near-term. 

 

Analyst Rhian Tucker in a note to investors said strong results were expected from specialty chemicals producer Rhodia and industrial gases firm Linde.

 

“We are convinced that (Rhodia) will prove that it has successfully transformed itself into a stable, cash generative outfit for the long term,” said the report.

 

Tucker said estimates for Linde’s full year performance were conservative and expected a strong positive outlook on the back of new project wins.

 

Credit Suisse said Linde’s main European rival Air Liquide still “fails to impress,” and was unconvinced the company could deliver the profit growth investors were looking for.

 

Air Liquide’s relatively low exposure to emerging markets could mean further downside in view of the weakening US and European macroeconomic outlook, said the bank.

 

Credit Suisse was confident Dutch coatings producer Akzo Nobel would be resilient to the global slowdown, with new acquisition ICI already reporting above-expected 6.6% sales growth in the fourth quarter.

 

Outlooks were mixed for German producers BASF and Lanxess. “Both companies have a lingering market uncertainty around whether recent restructuring efforts will prove enough to avoid a melt-down in the commodity down-cycle,” said Tucker.

By: Mark Watts
+44 20 8652 3214

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