05 November 2008 09:01 [Source: ICIS news]
SINGAPORE (ICIS news)--Ciba has reported a net loss of Swiss francs (Swfr) 523m ($451m, €346m) in the nine months to 30 September mainly due to a second-quarter Swfr595m impairment charge on its Water and Paper treatment segment, the specialty chemicals producer said on Wednesday.
The firm had recorded a net profit of Swfr153m in the nine months to 30 September in 2007, the Switzerland-based company said.
Third-quarter net income stood at Swfr46m, it said, without disclosing year-on-year comparisons.
Sales for the nine months of 2008 fell 6.25% to Swfr4.64bn from Swfr4.95bn in the previous corresponding period due to the fall in demand and trading volumes in the Europe and Americas regions, the company said.
"Prices of raw materials rose by 18% during the quarter as effects of record high oil price in July filtered through to downstream derivatives," the company said.
The company’s Coatings Effects and Plastic Additives segments were also hit by weakening demand in the automotive and construction industries and some customers declaring force majeure in contracts and stopping purchase following Hurricane Ike in the US.
"Demand started to drop significantly in August in a number of industries, notably automotive and construction, which severely affected the results," said CEO Brendan Cummins.
"Looking ahead, we are experiencing the effects of the economic slowdown particularly in Europe, where there was a sudden deterioration in demand in a number of customer industries in the third quarter," he added.
Cummins also expected demand to start falling in the Americas in the fourth quarter with Asia experiencing a spill-over effect from the global economic slowdown.
"It is expected that current earnings before interest and tax margin levels can be maintained, however, free cash ow levels are expected to be lower than previously anticipated," Ciba said.
The Ciba board also said that they recommended shareholders to accept BASF’s takeover offer of Swfr50/share as the company would stand to benefit from the Germany-based company’s research, production and marketing platform.
BASF had announced on 3 November that it has begun the additional acceptance period from 3 November to 14 November for Ciba shareholders who have not yet tendered their shares.
BASF holds 68.1% of Ciba’s shares as on 3 November and expects to complete the acquisition in the first quarter of 2009.
($1 = Swfr1.16/€1 = Swfr1.51)For more on BASF and Ciba visit ICIS company intelligence
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