UpdateRhodia's share price up 10% on strong Q3, bullish outlook

04 November 2009 12:02  [Source: ICIS news]

LONDON (ICIS news)--Rhodia’s shares rose by around 10% on Wednesday after the French specialty chemicals company released strong third-quarter results and a bullish outlook for the fourth quarter.

Rhodia’s shares were trading at €11.49 at 12:41 local time on the Euronext exchange, up from Tuesday’s close of €10.45.

Earlier, it posted a third-quarter net profit down 75% year on year to €14m ($21m) but a net profit excluding discontinued operations up 59% to €35m.

The company made a loss from discontinued operations of €20m in the third-quarter, essentially due to a one-off charge linked to a previously divested activity, Rhodia said in a statement.

In the third quarter of 2008 the company had benefited from capital gains on the disposal of its isocyanates business, it added.

Rhodia’s sales for the three-month period ending September 30 were down 18% to €1.04bn.

"In the third quarter [2009], our results continued to improve substantially, especially in our Polyamide and Silcea activities,” said chairman and CEO Jean-Pierre Clamadieu in a statement.

“This was due not only to a significant recovery in demand driven by emerging markets, but also to our ability to defend margins and our enhanced operational efficiency,” Clamadieu added.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the Polyamide division for the three-month period ending 30 September were up 37% to €52m due to improve demand and a tight market, the company added.

Rhodia's Acetow division also saw growth in the three-month period – its EBITDA was up 67% year on year to €35m.

Rhodia said trends for 2010 remained uncertain but the company expected overall demand for the fourth quarter to be similar to that seen in the third quarter.

Clamadieu said at an analyst conference following the release of the results, that unless there had been a dramatic change in current economic conditions, recurring EBITDA for the fourth quarter of 2009 was anticipated to be greater than €160m.

Although Rhodia’s Polyamide division has had to declare force majeure on polyamide 6,6 (nylon 6,6) intermediates in Europe due to logistical problems caused by the low Rhine levels, this was not expected to impact the division’s fourth-quarter results, Clamadieu said.

He added that there was still not a lot of visibility in terms of the 2010 outlook.

However, the company had started to see quick recoveries in Latin America and Asia and demand for products was growing, he said.

($1 = €0.68)

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By: Lucy Craymer
+44 20 8652 3214

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