Süd-Chemie reports marked upturn in business activity during first nine months of 2010
Süd-Chemie AG, Munich reported a positive performance for the first nine months of 2010. Following a weak start to the year, the specialty chemicals enterprise for catalysts and adsorbents recorded a marked upturn in business activity. Compared with the first three quarters of 2009, consolidated revenue was up 13.2% to EUR 896.4 million; in the first quarter of 2010, the year-on-year increase amounted to only 1.0% and to 5.7% at the end of six months. The revival was largely due to dynamic performances in the sectors of foundry chemicals, plastic additives and environmental catalysts, which had been heavily hit by the economic crisis. The highly-profitable industrial catalysts business also reported significant growth after a weak start to the year.
The improved business situation was also reflected in the consolidated operating profit. Amounting to EUR 72.5 million, profit from operations (EBIT) fell slightly short of the comparative 2009 figure (EUR 76.5 million), although account must be taken of the fact that earnings for the first nine months of 2009 included non-recurring income of EUR 15.8 million accruing from the acquisition of a catalyst plant in China. Adjusted for all non-recurring items, the EBIT increased significantly during the first nine months of 2010 compared with the previous year, climbing by 22.1% to EUR 77.3 million. Earnings before interest, taxes and depreciation (EBITDA) rose slightly by 0.9% to reach EUR 121.1 million.
In addition to rising demand and improved plant utilisation, earnings also benefited from a more profitable product mix, cost savings and price increases. A negative impact on earnings was felt as a result of high start-up costs in Süd-Chemie´s two new business segments, namely battery materials (lithium iron phosphate for batteries used in electric automobile drives) and biocatalysis (a process used to manufacture second-generation bioethanol from straw).
The recovery on world chemical markets had a positive influence on the performance of Süd-Chemie´s operating units in 2010, with nine-month revenues increasing, in some cases significantly, in all six Business Units. The Business Units for Adsorbents and Additives, Foundry Products and Specialty Resins, Energy and Environment and also Water Treatment reported a double-digit percentage growth in revenue and even higher increases in operating profit (EBIT). Although the Performance Packaging Business Unit experienced a slight drop in earnings due to restructuring costs in connection with the closure of two production plants in Switzerland and the US, its EBIT for the first nine months also rose significantly after adjustment for these non-recurring items. Thanks to a strong third quarter, the revenue generated for the first nine months by the largest and most profitable Catalytic Technologies Business Unit exceeded the comparable 2009 figure, in spite of a weak start to the year. Although down on a year-on-year basis, its EBIT is already significantly higher that last year´s figure, following adjustment for high non-recurring income during the third quarter of 2009.
As a result of the positive business performance in the first nine months, notably during the third quarter, the company is raising its cautious revenue forecast of EUR 1.125 billion for the full year of 2010 issued at the beginning of the year to approx. EUR 1.2 billion. This represents an increase of over 10% compared with 2009. In spite of the higher revenue forecast, Süd-Chemie still anticipates an approximately 10% rise in the operating EBIT in 2010, following adjustment for non-recurring items. This is due to royalty income having been postponed until next year. In 2010, the company is expecting additional non-recurring income amounting to a low double-digit million figure as a result of forming a joint venture with Ashland Inc., Covington, USA in the field of foundry chemicals and auxiliary products, provided that, as contractually agreed in July, closing becomes legally effective before the end of the fourth quarter of 2010.
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