H1 results for Degussa

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Despite difficult economic conditions, Degussa stands firm and does
not forecast changes for the full year 2001.

Despite difficult economic conditions, the German group providing specialty chemicals Degussa stands firm and does not forecast changes for the full year 2001. EBITA for Degussa's core business rose from Euro430m to Euro466m (+8 per cent). The consolidation of Laporte's earnings from April 1, 2001 and the foresighted introduction of cost-saving measures contributed to this improvement. The non-core businesses reported EBITA of Euro149m, a year-on-year decline of 19 per cent. Overall, EBITA remained unchanged year-on-year at EUR 615 million. The consolidation of Laporte resulted in higher amortisation of goodwill and a significant rise in interest expense. EBIT declined 4 per cent to Euro484m and the operating result slipped 20 per cent to Euro288m. Overall, income before income taxes totaled Euro85m in the first six months of 2001, compared with Euro390m in the first six months of 2000. Income tax expense was more than offset by deferred tax assets relating to losses carried forward, giving a positive tax position. Group net income after minority interests was therefore slightly above the previous year's level at Euro138m. Earnings per share in the first half rose from Euro0.65 to Euro0.67. Without amortisation of goodwill earnings per share rose from Euro1.18 to Euro1.31. Sales excluding precious metals trading were up 7 per cent in the first half at Euro8.7bn. After adjustment for acquisitions and divestments, the increase was 8 per cent. Degussa's core businesses lifted sales 6 per cent to Euro5.5bn. With overall volumes unchanged, 3 per cent of this increase was due to higher prices as part of the increase in raw material costs was passed on to customers. Two per cent was due to changes in the group of companies consolidated and 1 per cent to exchange rate movements. The non-core businesses raised sales (excluding precious metals trading) 9 per cent to Euro3.2bn. The Health & Nutrition division raised sales 15 per cent to Euro598m and EBITA rose 23 per cent to Euro85m. This was mainly due to the Feed Additives business unit, which benefited from a substantial rise in demand. This business unit's EBITA advanced significantly year-on-year to a very good level. In the Flavours & Fruit Systems business unit, extracts and flavours proved particularly successful and EBITA also rose perceptibly. In the Texturant Systems business unit weaker business in the USA and Asia was offset by a good performance in Europe and EBITA was on a par with the previous year. By contrast, the BioActives business unit reported far weaker earnings than a year earlier because it was adversely affected by low demand for dietary supplements in the USA. According to Degussa​, an economic upturn for the chemical industry is not anticipated before 2002, which renders the cost-management measures introduced by Degussa earlier this year even more important. Degussa expects to report an improvement in EBITA and the operating result after goodwill amortisation and interest expense to be on last year's level. In addition, proceeds from divestments that have been agreed upon but not yet completed should have a positive effect on income before taxes.

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