German chemical firms report improved 1Q figures

Related tags Cent Chemical industry

Germany's chemical companies have reported improved sales and
earnings in the first quarter of the year, and are optimistic of an
improved operating environment through 2005, reports Phil

BASF​ reported a solid performance in the first quarter of 2005, as strong demand for its products and price rises offset the continuing high raw material costs affecting the chemical sector.

The chemicals reported a sales increase of 11.4 per cent to more than €10 billion - the first time in its history that this threshold had been breached - while operating earnings rose by a third to the record level of €1.5 billion, once again exceeding analysts' expectations.

"The first quarter of 2005 followed smoothly on from the extraordinarily good year for chemicals that was 2004,"​ said BASF chairman Juergen Hambrecht at the firm's general shareholders' meeting. However, while the results in North America and in Europe were strong, the group's figures for Asia and South America were on the decline, held back by the cost of commissioning new plants.

BASF's oil and gas segment was the start performer with sales up 32 per cent, followed by plastics with a 21 per cent hike. Chemicals was up 16 per cent, but agricultural and nutritional products, which includes the Pharma Solutions business, slipped 2 percent, though this was the result of decreased demand for pesticides.

Merck KGaA​ reported a 7.6 per cent rise in first-quarter 2005 sales to €1.38bn, with positive developments across the pharmaceutical and chemical sectors, with operating profit up 17 per cent to €198m.

Bernhard Scheuble, chairman of the firm's executive board, said the pharmaceutical business sector generated total sales of €900m, up 11.3 per cent, accounting for two thirds of group turnover.

The division was driven by colorectal cancer drug Erbitux (cetuximab), which saw turnover rise 17 per cent to €42m, and the contribution from generic drugs which rose 11 per cent to €413m, despite the negative effects of currency.

There was less robust news from Bayer's chemicals spin-out Lanxess​, which despite reporting narrower losses announced a major restructuring and job cutting exercise last week.

Lanxess, which achieved its independence in January, reported a net loss of €12m last year, compared to €997m in 2003. On the plus side, sales were up 7 per cent to €6.7bn.

"Despite the improvements achieved, we were less profitable last year than any of our major European competitors because we were unable to benefit sufficiently from the recovery in the chemical economy,"​ said Lanxess chairman Axel Heitmann in a statement.

The restructuring will include 1,200 job cuts, with the fine chemicals and styrenic resins units bearing the brunt of an exercise aimed at saving €100m a year. Lanxess currently employs around 20,000 people.

Meanwhile, Bayer​ has reported 50 per cent rise in operating earnings to €1.14bn for the first quarter on sales that were 16 per cent lower at €5.8bn. The company will present full first-quarter figures on May 10, but noted that profits at its healthcare unit also lifted, as the division offset the effects of the decline in sales of the antibiotic Cipro (ciprofloxacin) due to its patent expiry in the US, and charges relating to its acquisition of Roche's over-the-counter medicines business.

- According to Cefic, the European Chemical Industry Council, EU chemicals production increased 2.9 per cent in 2004, the largest gain in four years. The strongest growing segments were petrochemicals, plastics, and fine and specialty chemicals. The growth rate of pharmaceuticals decreased greatly as compared to recent years. Cefic expects this positive trend to continue in 2005, although at a lower rate.

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