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BASF ups research spend as acquisitions strengthen growth
Additives for Polymers
7% in Swiss francs terms to CHF4.874 billion (c. 3.0 billion). Excluding favourable currency effects, sales in local currencies increased by 4%. Sales of CHF1.589 billion in the third quarter also represented an increase over the same period in 2005, by 2% in local currencies and 1% in Swiss francs. Overall, sales prices were about stable, with selective price increases in areas where rising costs were most significant, the company says. Sales growth in Asia Pacific was very strong, up 9% in local currencies, with China showing particularly good results, up 14% over 2005, Ciba reports. Sales were up 4% in Europe and flat in the Americas. Gross profit of CHF1.432 billion for the first nine months of 2006 was up 8% in Swiss francs over the same period in 2005. The negative impact of increased raw material, utility and social benefit costs was more than offset by sales price increases and higher sales volumes, as well as higher production capacity utilization and the benefits of the Project Shape efficiency improvement programme. Launched in 2004, Project Shape is successfully coming to its conclusion, with all actions being implemented and the expected benefits materializing, Ciba says. Operating income (EBIT) before restructuring, impairment and other charges was up 5% over the same period in 2005. Restructuring costs relate mostly to Project Shape, with initial amounts for the Operational Agenda programme [ADPO, June 2006]. Income from continuing operations was level at CHF213 million. For 3Q 2006, income from continuing operations was up 22% to CHF96 million. For the Plastic Additives segment, nine-month sales rose 11% to CHF1.585 billion while operating income before charges was up 22% at CHF232 million. Sales grew as a result of slightly higher sales prices and strong volume increases, despite a temporary drop in plastic converting industry activities in the second half of September due to the uncertainties in the oil price. The segment was able to recoup the costs of higher utility and raw materials by increasing sales prices in businesses where the impact was most significant. Contact: Ciba Specialty Chemicals, Klybeckstrasse 141, CH-4002 Basel,
February 2007
Switzerland; tel: +41-61-636-4444; fax: +4161-636-3019; URL: www.cibasc.com
BASF ups research spend as acquisitions strengthen growth BASF AG is underlining innovation as the basis for its future profitable growth. It expects to generate annual sales of over 4 billion as of 2010 from new or improved products and applications that have been on the market for a maximum of five years, and sales from product innovations are set to increase to more than 5 billion per year in 2015. BASF’s R&D expenditures in 2006 were 20% higher than in 2005 at almost 1.3 billion. A further increase in R&D expenditures to 1.4 billion is planned for 2007 to expand global research activities. Between 2006 and 2008, 850 million has been earmarked for research activities in the company’s five targeted interdisciplinary growth clusters, which include investigation of new sources of raw materials [see ADPO, January 2006]. “Our goal is to expand our leadership through the continuous development of new products and solutions for our customers, and to constantly improve our competitive position through process development,” says BASF research executive director Dr Stefan Marcinowski. For 3Q 2006, BASF posted a 28% increase in sales to 13.3 billion – its thirteenth successive quarter of sales growth – with the newly acquired businesses of Engelhard, Degussa Construction Chemicals and Johnson Polymer contributing 1.8 billion. EBIT before special items rose 22% to 1.6 billion. Cumulative sales in the first nine months of 2006 increased by 23% to more than 38 billion, while EBIT before special items increased by 19% to 5.4 billion. The Performance Products segment, which includes the company’s pigments and colorants, posted a 41% increase in sales and an 11% rise in EBIT before special items aided by the contribution of the acquired businesses. According to BASF, the integration of the new businesses is proceeding as planned; 290 million per year in synergies are expected by 2010, for estimated one-time integration costs of about 200 million. The company has also established a new global programme to further increase
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efficiency and streamline business processes, including a number of site and plant restructuring measures. BASF expects this to result in total savings of 300 million per year by 2008. Contact: BASF AG, Carl-Bosch-Straße 38, D67065 Ludwigshafen, Germany; tel: +49-62160-0; fax: +49-621-60-42525; URL: www.basf. de
Chemtura tightens portfolio, reports third quarter loss Plastics additives major Chemtura Corp reported a loss from continuing operations of US$80.6 million on net sales of $917.0 million for 3Q 2006, compared to a loss of $120.3 million on sales of $918.4 million for 3Q 2005. The small decrease in sales is related to the divestment of the Industrial Water Additives business and lower sales volumes, which were mostly offset by increased selling prices and favourable foreign currency translation. For the nine months to end September 2006, the company posted a loss from continuing operations of $67.0 million on sales of $2849 million, up 35%. The Plastics Additives segment posted 3Q net sales of $403.5 million, up from $374.6 million in 3Q 2005. Operating profit for the quarter was $17.5 million, down from $25.4 million in the same period of 2005. For the first nine months of 2006, segment sales increased to $1210.1 million from $792.8 million in 2005. Operating profit for the period was $90.5 million, up from $57.5 million the previous year. Commenting on the results, chairman and CEO Robert L. Wood highlighted the “solid performance” of flame retardants, among other sectors, but said that margin recovery for non-flame-retardant plastics additives has not yet reached anticipated levels although the company has begun to recapture volume for these products. The company is focusing efforts on growing its best franchises, fixing problem areas, streamlining costs and honing the portfolio “to create a far better performing company”, Wood says. In line with this strategy of focusing on core businesses, Chemtura sold its majority interest in extrusion system manufacturer DavisStandard to joint owner Hamilton Robinson for $72 million in October 2006, and in November
Additives for Polymers
announced plans to sell its EPDM elastomers and rubber additives activities to Lion Chemical Capital. Proceeds will be used to reduce the company’s debt. According to Wood, divestment measures are to continue, leaving only the most profitable activities (above 15% margin). Activities below this level are antioxidants, PVC additives and surfactants, and the company plans to deal with these areas by mid 2007 by means of acquisitions, transfers out of the group, or joint ventures. Other problem areas are household detergents and polyurethane additives. In other recent news, Chemtura has signed long-term supply and purchase agreements with TETRA Technologies, Inc for a number of products. Among the terms, TETRA will buy bromine and tail brines from Chemtura and invest in its bromine operations. It will also sell sodium chloride and magnesium hydroxide extracted from the tail brines back to Chemtura for use, respectively, as a feedstock for chlorine production and as a flame retardant and/or neutralization agent. Contact: Chemtura Corp, 199 Benson Rd, Middlebury, CT 06749, USA; tel: +1-203-5732220; fax: +1-203-573-2800; URL: www.chemtura.com
Cabot posts improved 4Q and fiscal year results Cabot Corp achieved net income of US$27 million on sales of $663 million for its 4Q 2006 and net income of $88 million on sales of $2543 million for its full fiscal year 2006 ended 30 September. This compares to a net loss of $59 million for 4Q fiscal 2005 (sales of $558 million) and a net loss of $48 million (sales of $2125 million) for the full fiscal year 2005. Describing the 4Q results as “pleasing on the whole”, Kennett F. Burnes, Cabot’s chairman and CEO, says demand for products in all businesses remained strong during the quarter and the company was able to improve cash generation and successfully manage the volatility in feedstock and energy prices. The quarter also saw a reduction in staff in order to decrease costs, particularly in the carbon black product lines. Cabot plans to eliminate about 130 positions by the end of fiscal 2007 to streamline
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7% in Swiss francs terms to CHF4.874 billion (c. 3.0 billion). Excluding favourable currency effects, sales in local currencies increased by 4%. Sales of CHF1.589 billion in the third quarter also represented an increase over the same period in 2005, by 2% in local currencies and 1% in Swiss francs. Overall, sales prices were about stable, with selective price increases in areas where rising costs were most significant, the company says. Sales growth in Asia Pacific was very strong, up 9% in local currencies, with China showing particularly good results, up 14% over 2005, Ciba reports. Sales were up 4% in Europe and flat in the Americas. Gross profit of CHF1.432 billion for the first nine months of 2006 was up 8% in Swiss francs over the same period in 2005. The negative impact of increased raw material, utility and social benefit costs was more than offset by sales price increases and higher sales volumes, as well as higher production capacity utilization and the benefits of the Project Shape efficiency improvement programme. Launched in 2004, Project Shape is successfully coming to its conclusion, with all actions being implemented and the expected benefits materializing, Ciba says. Operating income (EBIT) before restructuring, impairment and other charges was up 5% over the same period in 2005. Restructuring costs relate mostly to Project Shape, with initial amounts for the Operational Agenda programme [ADPO, June 2006]. Income from continuing operations was level at CHF213 million. For 3Q 2006, income from continuing operations was up 22% to CHF96 million. For the Plastic Additives segment, nine-month sales rose 11% to CHF1.585 billion while operating income before charges was up 22% at CHF232 million. Sales grew as a result of slightly higher sales prices and strong volume increases, despite a temporary drop in plastic converting industry activities in the second half of September due to the uncertainties in the oil price. The segment was able to recoup the costs of higher utility and raw materials by increasing sales prices in businesses where the impact was most significant. Contact: Ciba Specialty Chemicals, Klybeckstrasse 141, CH-4002 Basel,
February 2007
Switzerland; tel: +41-61-636-4444; fax: +4161-636-3019; URL: www.cibasc.com
BASF ups research spend as acquisitions strengthen growth BASF AG is underlining innovation as the basis for its future profitable growth. It expects to generate annual sales of over 4 billion as of 2010 from new or improved products and applications that have been on the market for a maximum of five years, and sales from product innovations are set to increase to more than 5 billion per year in 2015. BASF’s R&D expenditures in 2006 were 20% higher than in 2005 at almost 1.3 billion. A further increase in R&D expenditures to 1.4 billion is planned for 2007 to expand global research activities. Between 2006 and 2008, 850 million has been earmarked for research activities in the company’s five targeted interdisciplinary growth clusters, which include investigation of new sources of raw materials [see ADPO, January 2006]. “Our goal is to expand our leadership through the continuous development of new products and solutions for our customers, and to constantly improve our competitive position through process development,” says BASF research executive director Dr Stefan Marcinowski. For 3Q 2006, BASF posted a 28% increase in sales to 13.3 billion – its thirteenth successive quarter of sales growth – with the newly acquired businesses of Engelhard, Degussa Construction Chemicals and Johnson Polymer contributing 1.8 billion. EBIT before special items rose 22% to 1.6 billion. Cumulative sales in the first nine months of 2006 increased by 23% to more than 38 billion, while EBIT before special items increased by 19% to 5.4 billion. The Performance Products segment, which includes the company’s pigments and colorants, posted a 41% increase in sales and an 11% rise in EBIT before special items aided by the contribution of the acquired businesses. According to BASF, the integration of the new businesses is proceeding as planned; 290 million per year in synergies are expected by 2010, for estimated one-time integration costs of about 200 million. The company has also established a new global programme to further increase
8
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February 2007
efficiency and streamline business processes, including a number of site and plant restructuring measures. BASF expects this to result in total savings of 300 million per year by 2008. Contact: BASF AG, Carl-Bosch-Straße 38, D67065 Ludwigshafen, Germany; tel: +49-62160-0; fax: +49-621-60-42525; URL: www.basf. de
Chemtura tightens portfolio, reports third quarter loss Plastics additives major Chemtura Corp reported a loss from continuing operations of US$80.6 million on net sales of $917.0 million for 3Q 2006, compared to a loss of $120.3 million on sales of $918.4 million for 3Q 2005. The small decrease in sales is related to the divestment of the Industrial Water Additives business and lower sales volumes, which were mostly offset by increased selling prices and favourable foreign currency translation. For the nine months to end September 2006, the company posted a loss from continuing operations of $67.0 million on sales of $2849 million, up 35%. The Plastics Additives segment posted 3Q net sales of $403.5 million, up from $374.6 million in 3Q 2005. Operating profit for the quarter was $17.5 million, down from $25.4 million in the same period of 2005. For the first nine months of 2006, segment sales increased to $1210.1 million from $792.8 million in 2005. Operating profit for the period was $90.5 million, up from $57.5 million the previous year. Commenting on the results, chairman and CEO Robert L. Wood highlighted the “solid performance” of flame retardants, among other sectors, but said that margin recovery for non-flame-retardant plastics additives has not yet reached anticipated levels although the company has begun to recapture volume for these products. The company is focusing efforts on growing its best franchises, fixing problem areas, streamlining costs and honing the portfolio “to create a far better performing company”, Wood says. In line with this strategy of focusing on core businesses, Chemtura sold its majority interest in extrusion system manufacturer DavisStandard to joint owner Hamilton Robinson for $72 million in October 2006, and in November
Additives for Polymers
announced plans to sell its EPDM elastomers and rubber additives activities to Lion Chemical Capital. Proceeds will be used to reduce the company’s debt. According to Wood, divestment measures are to continue, leaving only the most profitable activities (above 15% margin). Activities below this level are antioxidants, PVC additives and surfactants, and the company plans to deal with these areas by mid 2007 by means of acquisitions, transfers out of the group, or joint ventures. Other problem areas are household detergents and polyurethane additives. In other recent news, Chemtura has signed long-term supply and purchase agreements with TETRA Technologies, Inc for a number of products. Among the terms, TETRA will buy bromine and tail brines from Chemtura and invest in its bromine operations. It will also sell sodium chloride and magnesium hydroxide extracted from the tail brines back to Chemtura for use, respectively, as a feedstock for chlorine production and as a flame retardant and/or neutralization agent. Contact: Chemtura Corp, 199 Benson Rd, Middlebury, CT 06749, USA; tel: +1-203-5732220; fax: +1-203-573-2800; URL: www.chemtura.com
Cabot posts improved 4Q and fiscal year results Cabot Corp achieved net income of US$27 million on sales of $663 million for its 4Q 2006 and net income of $88 million on sales of $2543 million for its full fiscal year 2006 ended 30 September. This compares to a net loss of $59 million for 4Q fiscal 2005 (sales of $558 million) and a net loss of $48 million (sales of $2125 million) for the full fiscal year 2005. Describing the 4Q results as “pleasing on the whole”, Kennett F. Burnes, Cabot’s chairman and CEO, says demand for products in all businesses remained strong during the quarter and the company was able to improve cash generation and successfully manage the volatility in feedstock and energy prices. The quarter also saw a reduction in staff in order to decrease costs, particularly in the carbon black product lines. Cabot plans to eliminate about 130 positions by the end of fiscal 2007 to streamline
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