Strong growth in 1H for H&R Wasag
sales and earnings in the first half of the year, helped by its
in-house refinery operations that allow it to anticipate and react
early to changing oil prices.
"Against the backdrop of enormous pressures resulting from the movements in the price of oil, the group has posted satisfactory growth," said Dr Horst Hollstein, the company's chief executive.
H&R Wasag reported sales of €294 million in the first half of 2005, a rise of 35 per cent over the previous year. The company said the growth was due both to overseas investments made in the middle of 2004 and to higher prices for oil-based specialty products.
Operating earnings in the first half of the year rose by 30 per cent to €19 million, and would have been higher without the influence of crude oil prices, it said.
The growth in earnings, which was encouraging in view of the overall conditions, was achieved by steadily reducing the group's exposure to the crude oil market within the Chemical Pharmaceutical Division.
Production activities in H&R Wasag's two refineries in Salzbergen and Hamburg are now complemented by a rising share of sales accounted for by trading activities. The acquisition of BP businesses in South Africa, Thailand and Australia last year has taken 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 activity also means that changes in raw material prices brought about by the crude oil market can be anticipated at an early stage and be immediately converted into rising sales prices, according to the company.
In the period from January to June, the price of crude oil increased by 50 per cent, reaching a record level of over $63 at the beginning of August. At the same time, the US dollar strengthened against the euro, resulting in a further raw material cost increase in the Chemical/Pharmaceutical Raw Materials division, which accounts for the largest share of the group's sales.
Chemical/Pharmaceutical Raw Materials reported sales of €250 million, a rise of more than 40 per cent, helped by price increases and the incorporation of BP's chemical/pharmaceutical specialty products business in the latter half of 2004. The other two divisions, precision plastics and explosives, reported sales up slightly at €18,8 million and €24.8 million, respectively..
H&R Wasag said the earnings targets for the current year remain attainable , providing the situation on the oil markets stabilises with lasting effect in the second half of the year.
