Specialty growth held by weak demand - analysts

22 July 2008 14:23  [Source: ICIS news]

LONDON (ICIS news)--Slowing global demand will restrict growth in the European specialty chemicals sector for the second half of 2008 through 2009 as raw materials hikes and a negative currency squeeze profit margins, Credit Suisse said on Tuesday.

In a note to investors, the bank said some players would handle these challenges better than others, picking out Switzerland's Ciba and Nethelands-based life and material sciences player DSM as potential strugglers.

“Surprisingly despite the differences in the companies the themes remain largely the same: currencies, raw materials, potential for prices increases and any sign of slowing demand,” said Credit Suisse in its second-quarter forecast.

“Our top picks are Syngenta, Linde, Bayer and Akzo Nobel where we believe branding and technology are the secret to cost pass-through, and where synergy benefits are driving near-term profitability,” it added.

Specialty chemicals stocks performed strongly last week in the run up to the second-quarter results period.

Rhodia shares rose more than 15% while Clariant and Lanxess stock increased by more than 10%.

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By: Mark Watts
+44 20 8652 3214

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