Degussa reviews organisation

14 November 2005 00:01  [Source: ICB]

Four years after the merger of Degussa-Hüls with SKW Trostberg into a leading speciality chemicals group, Degussa is juggling several internal projects to review its forward strategy and improve its organisation.

At the autumn press conference in Düsseldorf, Germany, last week, chairman Utz-Hellmuth Felcht said the €50m Strategy & Organization scheme, supported by Boston Consulting, is being conducted under his ‘personal direction’.

Reports had suggested the review was being imposed on the group by major shareholders RAG (50.1%) and Eon (43%), who were disappointed in particular by Degussa’s repeated poor fine chemicals performance. The firm’s net results were hurt by a total impairment charge of €836m on three of its business units: building blocks; exclusive synthesis and catalysts; and peroxygen chemicals, leading to a net loss of €710m from €76m in July-September last year

The new project supplements the ‘more operatively oriented’ €150m Degussa 2008 programme – devised by McKinsey and aimed at improving operating profit (Ebit) by €300m.

‘Major structural and personnel changes’ are not being ruled out; however, Felcht sought to play down any dramatic elements in the 2008 plan. While this is likely to involve unspecified job losses, he said management hopes to avoid compulsory redundancies.

In the loss-making fine chemicals activities, Degussa is currently reducing the European workforce by 700 people – including 200 administrative jobs. Some 390 positions already have gone, without compulsory redundancies.

As part of the forward plans, the group is looking at further expansion in China and eastern Europe.

In China, the new 80:20 polyether ether ketone (PEEK) joint venture with Jilin University, JIDA Degussa High Performance Polymers, is expected to be finalised ‘any day now’, said Felcht. Plans to build a 100 000 tonne/year methyl methacrylate (MMA) plant in China are to be presented to the Degussa supervisory board in December.

In eastern Europe, Degussa wants to work closely with academic institutions to identify existing technology it could help to commercialise – mirroring what it is already doing in China.

But while Felcht said the dynamics of China make it essential to invest in new capacity there, new plants will be built in eastern Europe only when the German plants are fully utilised.

One exception could be the construction chemicals sector. This ‘is mostly a local business’, he said.

ICIS Copyright © Reed Business Information 2009

< previous article(ICIS Chemical Business podcast November 2, 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.