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Akzo Nobel: chemicals robust, but additives are weaker
Additives for Polymers
growth in any individual market or industry. The strength of the Swiss franc will continue to have a negative affect both on sales growth and on margins. The company does not share the optimistic view of an industry ‘low’ in mid-1999 and believes it is difficult to forecast the full impact of the weakening economy. If the trends shown in the second half of 1998 continue, Ciba does not expect to be able to maintain the current EBITDA margin levels and, under such conditions, a decline of 1% “or somewhat more” cannot be excluded. Contact: Ciba Specialty Chemicals, PO Box, CH-4002 Basel, Switzerland; tel: +41-61 696 3478; +41-61 696 3019
Clariant: strong business in Europe did not offset downturn Reporting sales of CHF 9341 million for the full year 1998, Clariant commented that strong business performance in Europe did not completely make up for the downturn in South East Asia and Latin America, plus a levelling-off in the USA. Sales contracted by 1% in local currencies and 6% in Swiss francs. The sharp drop in volumes in Asia caused a fall of more than CHF 100 million. Sales were, in fact, better in Europe and the USA and continuing efforts to rationalize the product portfolio and eliminate activities with poor potential for innovation and earnings caused a reduction of CHF 150 million in sales, but actually resulted in improved margins. For the year, the management expects that operating margins will again show an improvement and a double-digit increase in net income. For 1999, higher earnings are again anticipated. Pigments and Additives Division sales fell 6%, from CHF 2006 million to CHF 1882 million (equivalent to -3% in local currencies), and Masterbatches declined l%, from CHF 986 million to CHF 977 million, but were actually 4% up when calculated in local currencies. Business trends in these sectors were mixed in the various world regions: sales grew in Europe and held their own in the NAFTA area, but fell in the crisis regions of South East Asia and pigments Latin America. High performance grew faster than the overall organic pigments
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April 1999
market, demanding an increase in capacity. In the Additives segment, there was buoyant demand for flame retardants, light stabilizers, process stabilizers and UV adsorbers. Activities in the Masterbatch sector were above average and, in the last few weeks of 1998 there were two significant moves: the acquisition of the Hydrocerol business of Boehringer Ingelheim, and the formation of a joint venture with a leading Korean manufacturer of compounds, Sang Ho Mercantile Co, which will greatly strengthen Clariant’s presence in South Korea and Japan, which it regards as two key markets. Contact: Clariant International Ltd, Rothausstrasse 61, CH-4132 Muttenz 1, Switzerland; tel: +41-61 469 6969; fax: +41-61 469 6999
Akzo Nobel: chemicals robust, but additives are weaker Plastics and Processing Additives at Akzo Nobel weakened in 1998 but results from Polymer Chemicals and Functional Chemicals surpassed the record levels of the previous year, due to higher volumes sold. Overall growth of the Chemicals Division was 3%, after a negative effect of 1% each from lower selling prices and changes in exchange rates. Return on sales was a “robust” 9.4%, close to the target of lo%, despite the weakening business climate for chemicals. Return on investment was 12.2%, against a target of 15% over the business cycle. Akzo reports that the integration of Courtaulds and disposal of unwanted segments is going well. The structure of the combined Coatings activities (which is now the world’s largest) has been announced and Fibres operations have been brought together in a separate organization, named Acordis (with the ultimate objective of demerging it from Akzo Nobel). The group reports a strong performance in the first half of 1998, but an unexpected turning point came in July, with the growing effects of the Asian crisis, aggravated by the crisis in Russia and the slowdown in Latin America. Group operating income was 11% higher, at NLG 2737 million, of which 5% was attributable to Courtaulds, while the remaining rise was mainly due to the Pharma division.
0 1999 Elsevier Science
April 1999
In the light of economic uncertainties and the proposed demerger of Acordis, Akzo Nobel is not giving an income forecast for 1999 - but comments that it will be hard to match the strong earnings level of the first half of 1998. During 1999 the group will consolidate and concentrate on reducing debt through strong cash flow, a restrictive policy on investment and acquisition, and further divestments. Contact: Akzo Nobel Chemicals By Stationsplein 4, NL-3818 Amersfoort, The Netherlands; tel: +31-33 467 6767; fax: +31-33 467 6100
Goodrich: lower additive sales,, but better profitability B F Goodrich Performance Materials group recorded improvements in turnover and operating income in the last quarter of 1998, reaching a total of $297.5 million ($229.9m) sales and $138.1 million ($102.7m) income. Within the group, Polymer Additives and Speciality Plastics recorded a slight downturn in sales, to $108.6 million ($111.2m), but a positive development in income, to $17.3 million ($16.7m). Chairman and Chief Executive David L Burner noted that, in November, the company had reached agreement with Coftec Industries on “a strategic merger that will bring together two strong, profitable companies to create an even stronger company”. Contact: B F Goodrich Co, Specialty Polymers & Chemicals Division, 9921 Brecksville Rd, Brecksville, OH 44281-2084, USA; tel: + I-21 6 336 6616; fax: +l-216 334 4709
Cabot: carbon black sales flat, but earnings better Earnings from the carbon black business were helped by lower feedstock costs but this was to some extent offset by lower selling prices, reported Cabot Corporation, for the last quarter of 1998 (the first quarter in the company’s year). This sector increased its contribution to overall earnings by the equivalent of $0.11 per share. Year-to-year, sales volumes of carbon black were flat, as increases of 3% and 4% in North America and Asia/Pacific respectively were off-
0 1999 Elsevier Science
Additives for Polymers
set by declines of 3% and 11% respectively volumes in Europe and South America.
in
Cabot’s plastics (compounding) business also experienced negative year-to-year earnings for the company’s first quarter. Volumes were down by 18%, reflecting weaker conditions in all of the main markets and, to a lesser extent, the effects of the company discontinuing a ‘oneproduct’ family during 1998. Operating profit from the plastics business was about $1 million less than in the first quarter of the previous year. Contact: Cabot Corp, 7.5 State Street, Boston MA 02109-I 809, USA; tel: + I-61 7 345 0100
Pointers from other reports: Albemarle Corporation: Polymer Chemicals operating results from flame retardants in the fourth quarter were favourable, said Floyd D Gottwald Jnr, Chairman of the Board and Chief Executive Officer. The company reported net earnings for the year of $205.4 million, 6% higher than in 1997, reflecting favourable manufacturing costs, higher plant utilization and lower raw material costs, offset to some extent by unfavourable effects of foreign exchange, and interest and expenses of higher average debt. Engelhard Corporation: Net earnings rose 13% for the full year 1998, to a record $187 million, on sales of $4.17 billion (+15%). In Pigments and Additives, sales rose 4% to $148 million, but operating earnings were down 19%, to $23 million. Higher costs were incurred in speciality pigments and additives, as a result of series of small charges, partly related to improvements in productivity. H B Fuller Co: Earnings from the first quarter of 1999 are expected to be “substantially” higher than in the previous year, before charges for restructuring. Savings from restructuring, and from reduced raw materials costs, are expected to become positive contributors to higher eamings sooner than had been expected. President and Chief Executive Al Stroucken said that the company had been working to lower its cost structure and, despite “some continued softness” in North America and uncertainties in Latin America, the impact of restructuring and costcutting was being felt.
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growth in any individual market or industry. The strength of the Swiss franc will continue to have a negative affect both on sales growth and on margins. The company does not share the optimistic view of an industry ‘low’ in mid-1999 and believes it is difficult to forecast the full impact of the weakening economy. If the trends shown in the second half of 1998 continue, Ciba does not expect to be able to maintain the current EBITDA margin levels and, under such conditions, a decline of 1% “or somewhat more” cannot be excluded. Contact: Ciba Specialty Chemicals, PO Box, CH-4002 Basel, Switzerland; tel: +41-61 696 3478; +41-61 696 3019
Clariant: strong business in Europe did not offset downturn Reporting sales of CHF 9341 million for the full year 1998, Clariant commented that strong business performance in Europe did not completely make up for the downturn in South East Asia and Latin America, plus a levelling-off in the USA. Sales contracted by 1% in local currencies and 6% in Swiss francs. The sharp drop in volumes in Asia caused a fall of more than CHF 100 million. Sales were, in fact, better in Europe and the USA and continuing efforts to rationalize the product portfolio and eliminate activities with poor potential for innovation and earnings caused a reduction of CHF 150 million in sales, but actually resulted in improved margins. For the year, the management expects that operating margins will again show an improvement and a double-digit increase in net income. For 1999, higher earnings are again anticipated. Pigments and Additives Division sales fell 6%, from CHF 2006 million to CHF 1882 million (equivalent to -3% in local currencies), and Masterbatches declined l%, from CHF 986 million to CHF 977 million, but were actually 4% up when calculated in local currencies. Business trends in these sectors were mixed in the various world regions: sales grew in Europe and held their own in the NAFTA area, but fell in the crisis regions of South East Asia and pigments Latin America. High performance grew faster than the overall organic pigments
6
April 1999
market, demanding an increase in capacity. In the Additives segment, there was buoyant demand for flame retardants, light stabilizers, process stabilizers and UV adsorbers. Activities in the Masterbatch sector were above average and, in the last few weeks of 1998 there were two significant moves: the acquisition of the Hydrocerol business of Boehringer Ingelheim, and the formation of a joint venture with a leading Korean manufacturer of compounds, Sang Ho Mercantile Co, which will greatly strengthen Clariant’s presence in South Korea and Japan, which it regards as two key markets. Contact: Clariant International Ltd, Rothausstrasse 61, CH-4132 Muttenz 1, Switzerland; tel: +41-61 469 6969; fax: +41-61 469 6999
Akzo Nobel: chemicals robust, but additives are weaker Plastics and Processing Additives at Akzo Nobel weakened in 1998 but results from Polymer Chemicals and Functional Chemicals surpassed the record levels of the previous year, due to higher volumes sold. Overall growth of the Chemicals Division was 3%, after a negative effect of 1% each from lower selling prices and changes in exchange rates. Return on sales was a “robust” 9.4%, close to the target of lo%, despite the weakening business climate for chemicals. Return on investment was 12.2%, against a target of 15% over the business cycle. Akzo reports that the integration of Courtaulds and disposal of unwanted segments is going well. The structure of the combined Coatings activities (which is now the world’s largest) has been announced and Fibres operations have been brought together in a separate organization, named Acordis (with the ultimate objective of demerging it from Akzo Nobel). The group reports a strong performance in the first half of 1998, but an unexpected turning point came in July, with the growing effects of the Asian crisis, aggravated by the crisis in Russia and the slowdown in Latin America. Group operating income was 11% higher, at NLG 2737 million, of which 5% was attributable to Courtaulds, while the remaining rise was mainly due to the Pharma division.
0 1999 Elsevier Science
April 1999
In the light of economic uncertainties and the proposed demerger of Acordis, Akzo Nobel is not giving an income forecast for 1999 - but comments that it will be hard to match the strong earnings level of the first half of 1998. During 1999 the group will consolidate and concentrate on reducing debt through strong cash flow, a restrictive policy on investment and acquisition, and further divestments. Contact: Akzo Nobel Chemicals By Stationsplein 4, NL-3818 Amersfoort, The Netherlands; tel: +31-33 467 6767; fax: +31-33 467 6100
Goodrich: lower additive sales,, but better profitability B F Goodrich Performance Materials group recorded improvements in turnover and operating income in the last quarter of 1998, reaching a total of $297.5 million ($229.9m) sales and $138.1 million ($102.7m) income. Within the group, Polymer Additives and Speciality Plastics recorded a slight downturn in sales, to $108.6 million ($111.2m), but a positive development in income, to $17.3 million ($16.7m). Chairman and Chief Executive David L Burner noted that, in November, the company had reached agreement with Coftec Industries on “a strategic merger that will bring together two strong, profitable companies to create an even stronger company”. Contact: B F Goodrich Co, Specialty Polymers & Chemicals Division, 9921 Brecksville Rd, Brecksville, OH 44281-2084, USA; tel: + I-21 6 336 6616; fax: +l-216 334 4709
Cabot: carbon black sales flat, but earnings better Earnings from the carbon black business were helped by lower feedstock costs but this was to some extent offset by lower selling prices, reported Cabot Corporation, for the last quarter of 1998 (the first quarter in the company’s year). This sector increased its contribution to overall earnings by the equivalent of $0.11 per share. Year-to-year, sales volumes of carbon black were flat, as increases of 3% and 4% in North America and Asia/Pacific respectively were off-
0 1999 Elsevier Science
Additives for Polymers
set by declines of 3% and 11% respectively volumes in Europe and South America.
in
Cabot’s plastics (compounding) business also experienced negative year-to-year earnings for the company’s first quarter. Volumes were down by 18%, reflecting weaker conditions in all of the main markets and, to a lesser extent, the effects of the company discontinuing a ‘oneproduct’ family during 1998. Operating profit from the plastics business was about $1 million less than in the first quarter of the previous year. Contact: Cabot Corp, 7.5 State Street, Boston MA 02109-I 809, USA; tel: + I-61 7 345 0100
Pointers from other reports: Albemarle Corporation: Polymer Chemicals operating results from flame retardants in the fourth quarter were favourable, said Floyd D Gottwald Jnr, Chairman of the Board and Chief Executive Officer. The company reported net earnings for the year of $205.4 million, 6% higher than in 1997, reflecting favourable manufacturing costs, higher plant utilization and lower raw material costs, offset to some extent by unfavourable effects of foreign exchange, and interest and expenses of higher average debt. Engelhard Corporation: Net earnings rose 13% for the full year 1998, to a record $187 million, on sales of $4.17 billion (+15%). In Pigments and Additives, sales rose 4% to $148 million, but operating earnings were down 19%, to $23 million. Higher costs were incurred in speciality pigments and additives, as a result of series of small charges, partly related to improvements in productivity. H B Fuller Co: Earnings from the first quarter of 1999 are expected to be “substantially” higher than in the previous year, before charges for restructuring. Savings from restructuring, and from reduced raw materials costs, are expected to become positive contributors to higher eamings sooner than had been expected. President and Chief Executive Al Stroucken said that the company had been working to lower its cost structure and, despite “some continued softness” in North America and uncertainties in Latin America, the impact of restructuring and costcutting was being felt.
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