Poland’s Ciech considers selling Zachem TDI business

20 March 2012 15:51  [Source: ICIS news]

LONDON (ICIS)--Poland-based Ciech group may put toluene di-isocyanate (TDI) subsidiary Zachem up for sale following the unit’s poor performance in 2011, Ciech said on Tuesday.

Zachem, Poland’s sole and Europe’s fifth biggest TDI producer, struggled with very low prices during the year while the main consumers of its output, the furniture and automotive industries, were hit by a downturn in demand across Europe, the company said.

Zachem saw its 2011 earnings before interest, tax, depreciation and amortisation (EBITDA) fall to a loss of zlotych (Zl) 59m ($19.0m, €14.4m) from a loss of Zl 7m a year ago, while sales revenues dropped to Zl 859m from Zl 999m in 2010, Ciech said.

However, Ciech CEO Ryszard Kunicki, while earlier on Tuesday announcing the Ciech group’s fourth-quarter 2011 and full-year 2011 results, predicted that Zachem’s 2012 performance should be “much better”.

The decline in TDI prices stopped during the fourth quarter while there was some slow price growth in the first months of this year, he said.

Zachem, also a producer of epichlorohydrin (ECH) and epoxy resins, is under sustained pressure from a rising oversupply of TDI in Europe, according to ING Bank.

Fellow European producers including Hungary’s BorsodChem and Bayer MaterialScience are building up their TDI production to capacity levels which far exceed Zachem’s potential output, it added.

Zachem has a plan to expand its TDI capacity by 15,000 tonnes/year to 90,000 tonnes/year by 2013.

($1 = Zl 3.10, €1 = Zl 4.11)

By: Will Conroy
+44 20 8652 3214

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