Degussa takes impairment charge on its fine chemicals activities and is stepping up restructuring of these operations
As part of its mid-term planning process, Degussa AG, Dusseldorf, Germany, tests its business units for impairment annually in accordance with the applicable IFRS standard. As a consequence of unsatisfactory business trends and a sharp reduction in earnings prospects for its fine chemicals activities, the Group is taking a total impairment charge of 830 million euros on three of its business units: Building Blocks, Exclusive synthesis & Catalysts and Peroxygen chemicals. 710 million euros of this relates to goodwill and 120 million euros to other assets. A large proportion of the impairment charge relates to the British fine chemicals group Laporte, which was acquired in 2001. No impairment has been ascertained for the Degussa Group's 17 other business units.
The impairment charge will be recognized as a one-off non-cash item in the non-operating result in the third quarter of 2005 and will thus have no impact on cash flow.
Contrary to previous assessments, the business situation and market prospects for the Group's fine chemicals activities have deteriorated steadily this year in the wake of considerable overcapacity in the sector. At the same time, there has been a further increase in competitive pressure, especially from Asian suppliers. Degussa will therefore also be stepping up the restructuring of its fine chemicals activities significantly. This will result in additional non-operating expense of 20 million euros this year, bringing total restructuring costs for the fine chemicals activities in 2004 and 2005 to 100 million euros.
In view of the good overall development of the other business units, Degussa is nevertheless reaffirming its outlook for 2005 as a whole: it anticipates a slight year-on-year improvement in both sales and EBIT.
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Topic world Synthesis
Chemical synthesis is at the heart of modern chemistry and enables the targeted production of molecules with specific properties. By combining starting materials in defined reaction conditions, chemists can create a wide range of compounds, from simple molecules to complex active ingredients.
Topic world Synthesis
Chemical synthesis is at the heart of modern chemistry and enables the targeted production of molecules with specific properties. By combining starting materials in defined reaction conditions, chemists can create a wide range of compounds, from simple molecules to complex active ingredients.
