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March 1, 2010 - Volume 88, Number 9
- p. 11
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Compared with the abyss of a year earlier, the fourth quarter of 2009 was a solid one for Europe’s chemical makers. The recession dragged down results for the year as a whole, though, and executives are hoping for improvement in 2010.
Germany’s BASF, which is the world’s largest chemical company, announced a sales drop of 8% for the quarter and 19% for the year when it reported results last Thursday. The firm turned a profit, compared with a loss in the year-ago quarter, but its earnings for 2009 were only half what they were in 2008.
Recapping the year, BASF said its chemical output dropped dramatically in late 2008 and then fell further in early 2009. Demand partially recovered over the course of the year, especially in Asia.
In 2010, BASF expects global industrial production to grow by almost 5%, albeit from a very low level. “The worst is behind us, even though dark clouds remain,” Chairman Jürgen Hambrecht said when reporting results. “Two thousand ten will be a transitional year. Overall, there are no signs of a self-sustaining, long-term recovery.”
BASF’s German compatriot Merck KGaA is the only big European firm reporting so far that has posted an increase in fourth-quarter sales. The company is happy with the full year as well. “We are presenting a financial statement for fiscal-year 2009 with which—considering the overall circumstances of last year—we can be satisfied,” Chairman Karl-Ludwig Kley said.
More typical was the Dutch specialty chemical maker DSM, which saw sales fall 1% in the quarter. Net earnings turned negative, largely because of a charge taken in its DSM Pharmaceutical Products business. Chairman Feike Sijbesma tried to put a positive spin on the results, pointing to improvement in the second half of 2009 as the firm’s materials science businesses started to recover.
Solvay reported its results as a pure chemical company for the first time, having completed the sale of its pharmaceutical business to Abbott Laboratories two days earlier. Sales for the quarter were down by 3%, but earnings rose more than 700%. For the year, the Belgian company’s sales fell 11% as its earnings rose 23%, mostly due to good performance in the former drug business.
Analysts are wondering what Solvay will do with the $7 billion it pocketed from the pharma sale. Dominik Frauendienst, chemicals and life sciences stock analyst at Germany’s Commerzbank, noted that Solvay managers say they want to invest in chemicals and plastics. “Hence, companies such as Symrise seem less likely as targets,” Frauendienst told clients, referring to a leading flavors and fragrances maker.
Kemira, the Finnish water treatment chemical company, posted a sales drop of 5% for the quarter and 12% for the year as business with the paper industry fell. Still, pointing to improved earnings, CEO Harri Kerminen called 2009 “a very good year for Kemira, considering the weakened global economy.”
Like BASF, most companies are not counting on a sustained upturn this year and plan to rely on more cost cutting to boost earnings. “Global economic conditions have improved, but growth in Europe remains uncertain,” said Jean-Pierre Clamadieu, CEO of France’s Rhodia. “We will therefore maintain our emphasis on operational discipline and cash generation.”
DSM also sees an uncertain economic outlook this year despite continued growth in Asia and Latin America. The company will continue trying to sell its elastomers, fertilizers, and melamine businesses in order to focus on life sciences and materials sciences.
At AkzoNobel, CEO Hans Wijers boasted of his firm’s ability to adapt to the new economic reality, saying “We are now well placed to take advantage of the upturn when it comes.” But Wijers conceded that it won’t come soon. “The stabilization we reported at the end of the third quarter has continued,” he said. “However, we believe the recovery is fragile and will be slow.”
- Chemical & Engineering News
- ISSN 0009-2347
- Copyright © 2011 American Chemical Society
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