23 January 2009 16:41 [Source: ICIS news]
LONDON (ICIS news)--Fitch Ratings has given a negative outlook to chemical companies in the EMEA (Europe, Middle East and Africa) region as production cutbacks in end-user markets painted a bleak demand picture in 2009, the credit watchdog said on Friday.
Fitch forecast year-on-year volume contraction on petrochemicals, polymers and plastics in line with key end-market demand and with the trends observed in the fourth quarter.
“Against depressed demand and this uncertain economic backdrop, volatility in feedstock costs and foreign exchange will present additional challenges for EMEA chemical producers,” said a Fitch statement.
Producers were expected to intensify their focus on cash preservation with priority given to cost-cutting programmes, selective capex spending and reduced shareholder distributions.
Fitch said these measures were unlikely to absorb the impact of the downturn and forecasted deterioration of in margins, operating profits and cash flow across the sector.
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