H&R Wasag 3Q figures bode well for 4Q

By Wai Lang Chu

- Last updated on GMT

Related tags H&r wasag Benchmark Petroleum Material

German specialty chemicals group, H&R Wasag, increased its
sales and earnings in the third quarter of this year, helped by its
in-house refinery operations that allow it to counter the steady
rise in costs arising from crude oil prices.

At the start of September the price of Brent crude, at over $70, reached another record level. Oil price has increased 75 per cent since the start of the year.

Despite the price hike, the company was confident the fourth quarter proceeds would compensate expenses and write-offs resulting from the sale and closing of product areas.

"As long there are no further costs from the crude oil price development we expect a good result for the last three months of 2005,"​ commented Dr. Horst Hollstein, CEO of H&R Wasag AG regarding the outlook towards the year-end.

H&R Wasag reported third quarter sales of €169.5 million compared with €157.4 million in the second quarter of the current year - an increase of 7 per cent.

The growth was due to consolidation in mid-2004 and also to higher sales prices.

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.

Operating earnings in the third quarter of the year rose by 20 per cent to €30.3 million (1.1.-30.9.2004: €25.3 million). In the third quarter EBITDA reached €10.8 million.

The company commented that since the specialty refineries in the Chemical-pharmaceutical raw materials division that make the largest contribution to group sales are able to pass on the rising material costs only with a time lag, profit margins were under pressure for the entire period.

Consequently the gross profit margin fell from 33 to 30 per cent during the period.

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