German fine chemicals group Degussa has been feeling the effects of the current climate, with sales slipping 1 per cent overall from €11.9 billion to €11.8 billion and EBIT (earnings before interest and taxes) dropping 5 per cent on the 2001 results.
And as a result of high one-off expenses and a negative earnings contribution from the discontinued operations, group net income was €227 million, a substantial 64 per cent drop from €627 million in 2001.
However Germany's third-largest chemicals company maintains that results from core business were in line with the prior year and it has given a confident outlook for core activities in 2003: an improvement in sales, EBIT and operating result.
In Health & Nutrition, sales dropped 4 per cent to €282 million in the fourth quarter of the year, from €293 in 2001, while EBIT at the unit plummeted 40 per cent to €28 million from €47 million last year. Over 2002, sales at the unit stayed level, only dropping 1 per cent to €1,179 million from €1,186 million. EBIT dropped 18 per cent however to €123 million.
"Degussa aims to sharpen is profile even further and expand its edge in specialty chemicals. In fiscal 2002 we did well despite the difficult business conditions, especially in our core operations," said Professor Utz-Hellmuth Felcht, chairman of the Degussa management board speaking at yesterday's results press conference in Dusseldorf, Germany.
The core operations lifted sales 1 per cent to €11 billion in 2002 and the EBIT reported by the core operations only slipped 3 per cent to €953 million (from €980 million in 2001). The operating result (EBIT after deduction of interest) came to €655 million, only just below the previous year's level of €658 million. Similarly, the operating result of the core businesses was only marginally lower than in the previous year at €692 million (€697 million in 2001).
The group also cut debt to € 2.4 billion, down from € 3.1 billion in 2001.
Looking at predictions for 2003, Professor Felcht said: "Our strategy of focusing our core business on robust operations with low cyclical exposure and stepping up our restructuring drive in response to the challenging economic conditions paid off in 2002. Systematic continuation of this strategy in 2003 should underpin our operating performance.
"We are therefore confident that our core operations will develop well this year, despite all the uncertain factors. Sales of our core operations should rise to around €11.5 billion and we anticipate an improvement in both EBIT and the operating result," added Felcht.