11 February 2008 15:55 [Source: ICIS news]
By Nigel Davis
LONDON (ICIS news)--Ciba Specialty Chemicals' full-year results and outlook were not greeted with any great hurrah but the reality behind CEO Brendan Cummins' remarks will have been appreciated.
Ciba is going to have a tough time of it in 2008 alongside many of its specialty chemical counterparts, particularly those that sell into the ?xml:namespace>
The slowdown in the
Ciba has Europe behind it and a growing presence in Asia and the Middle East to help offset the worst that the
The company has not inspired investors or others for many years but has plugged away steadily to capture volume growth whil not doing well on prices or costs.
Citigroup warned before the results announcement on Friday that this will be the first year of volume weakness for the firm since 2001. Volume growth has been helped by Ciba’s geographical sales split of 45% Europe; 29% Americas and 24% Asia Pacific.
Asia, the Middle East and
Local currency sales last year in the Africa and Middle East region grew at 19% in local currencies. Sales growth in
Ciba has to keep on working at capturing this growth profitably. It is promising to align production and other resources more effectively to do so.
The company has to keep running hard to catch up and that is why so much store is put by analysts and others on the change at the top as Cummins moves into the CEO spot - he did so on 1 January with former CEO Armin Meyer becoming chairman.
Cummins can push through even more change at the
At this stage in the business cycle, with economic clouds hanging over the important North American markets, Ciba’s
The firm is expanding
It is starting an antioxidants plant in
Cummins has talked about levering innovation investments in
The first phase of consolidation of the global production structure is almost complete with three production sites closed, the company says.
It adds that simplification of its legal structure is under way and that the benefits of both programmes are starting to materialise.
The next phase is to look harder at logistics and administration.
Ciba has been forward looking enough to pay a great deal of attention to the way it markets and sells its products and that focus is not going to shift.
Better marketing and sales can help the company manage margins. Ciba says it will take a differentiated approach on prices and volumes focusing on profitability and more consistent price management. Importantly, employee incentives are linked to strategic targets.
If Ciba is to battle the expected slowdown in some of its key markets effectively, it will have to push harder on costs and be cleverer in marketing, sales and innovation. The effectiveness of the implementation of its strategic plans will this year be tested to the full.
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