Think Tank: BMS will optimise global footprint

08 March 2013 09:31  [Source: ICB]

Chemical companies are seeing stronger business in China following the Lunar New Year holidays, and - despite some understandably deep concerns about future rates of growth - appear to be fairly positive about 2013.

Downstream players such as Belgium's Solvay have said there are signs that China markets are growing again. Bayer MaterialScience CEO Patrick Thomas told financial analysts that demand for its products in certain applications was picking up after the holidays.

man on globe Rex Features

 Rex Features

The company aims to rationalise worldwide operations

"We saw the usual slowdown around the Lunar New Year, but we're pretty confident looking forward," Thomas said. "Now that there is some semblance of stability in the government, we're seeing the stimulus programmes kicking back into the food chain," he added. That supports the Bayer MaterialScience polyurethanes business in refrigeration applications from domestic appliances through to refrigerated lorries.

"There's been a boost in the infrastructure restarts on several of the projects which were stopped during last year's uncertainty," Thomas said referring to the political and economic uncertainty surrounding the once-a-decade leadership handover in China last year.

Bayer said: "We based our 2013 budget on a modest global GDP growth driven by the ongoing recovery in the US and robust development in the emerging markets. The European economy is expected to remain weak."

Bayer said its sees a "positive ­development" in 2013 for all its key MaterialScience customer groups and that it is planning for a slight increase in sales (on a currency-adjusted basis) for MaterialScience this year to around €12bn ($15.6bn).

The outlook is based on an improving global supply/demand balance, a new efficiency drive and plant optimisation in Germany. The cost reduction programme is expected to improve margins in MaterialScience by 150 basis points through 2015.

Thomas said that Bayer MaterialScience has more than 100 ­different measures in its plan to raise efficiencies and that they cover most parts of the value chain.

The company is looking at the consolidation of some of its smaller manufacturing sites where market development has been achieved, for instance. In other words, fixed-cost reductions. It is also going to cluster some countries into regional platforms.

The regional reorganisation should lead to improved logistics and hence, ­further efficiency improvements.

By: Nigel Davis
+44 20 8652 3214

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