H&R Wasag triples pharmachem sales
tough market environment in the third quarter of the year, but
offset some of the impact by buying up businesses insulated from
rises in raw material prices.
Like its peers in the industry, H&R Wasag has been affected by the extreme movements in the price of crude oil, but was able to pass on some of these increases to its customers, albeit with a degree of time lag, said Dr Horst Hollstein, the company's chairman.
Between 1 January and 30 September, group sales stood at €365.5 million up from €155.7 million in the same period of 2003 as a result of the acquisition of BP's chemical/pharmaceutical specialty products business.
This drove H&R Wasag's chemical/pharmceutical sales up to €299.1 million from €103.9 million, while its other divisions (precision plastics and explosives) also posted gains.
Also, the acquisition of BP businesses in South Africa, Thailand and Australia took H&R Wasag into the new activity of trading in chemical and pharmaceutical raw materials which, in contrast to manufacturing, is scarcely affected by raw material price fluctuations.
"This has therefore provided us with our first security from raw material risks" in the division, said Hollstein.
Operating earnings (EBIT) at the group level rose to €11.6 million in the nine-month period, up from €8.8 million a year earlier. However, if the increased interest burden related to the acquisition is factored in, pretax earnings were €6.2 million, down from €7.2 million.
For 2005, said H&R Wasag, sales are expected to rise to more than €500 million and the pretax result is expected to be within a range of €20-€25 million, provided there is no extraordinary effects from changes in the price of crude oil.
"In spite of the headwind coming from the crude oil market, we have not come to a standstill but have kept moving forwards," said Hollstein. "The extreme market conditions alone have led to a temporary weakening in the growth of earnings, but the medium to long-term trend is unbroken."
