Price rises bolster H&R Wasag in 2Q
months, German specialty chemicals group H&R Wasag is
maintaining its growth forecasts for the year on the back of price
increases.
"As expected, the second quarter was marked by an extremely volatile raw materials market, but in the meantime we have adjusted our prices to take account of the price increases," explained Dr Horst Hollstein, the company's chief executive.
That said, the division with the highest sales, the Chemical Pharmaceutical Raw Materials division, was limited in its potential for price hikes by long-term contracts with customers in which prices are fixed for several months. This means that the high price of raw materials was not generally reflected in sales prices until 1 July, said the firm.
"If there are no further extraordinary effects, we will increase earnings by over 30 per cent compared with last year and thereby achieve our profits target," Dr Hollstein continued.
The company expects to record pretax profits of €14 million in 2004, up from €10.6 million in 2003. Consolidated sales will more than double to €470 million as a result of its recent takeover of BP's special chemicals activities.
And 2005 should be even better, claims the company. Integration costs of around €5 million in 2004 in the wake of the BP takeover will no longer apply, while the implementation of extensive synergy effects within Chemical Pharmaceutical Raw Materials will boost its earnings potential, it added.
"According to an initial study, it will be possible to achieve a positive boost to earnings of up to €10 million in the medium term," said H&R Wasag.
The group posted sales of €217.9 million in the first half, up from €99 million in the same period in 2003. In the process, the company increased its pretax earnings from €3.1 million to €4.7 million.
