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|  | 04/23/2007 - Annual Report Press Conference: After a record year, Süd-Chemie is launching an investment drive in 2007 aimed at ongoing profitable growth
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- 2006: Record sales of over €1 billion; profits (EBIT) rise by 24% to top €83 million
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- 2007: Expected increase in sales of at least 5% and rise in profits of at least 10%
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- 2007 and 2008: Investment in future markets scheduled to exceed €100 million p.a.
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At the annual press conference held today to present its annual report for a very successful 2006, Süd-Chemie AG, Munich reaffirmed its optimistic forecasts for 2007 and announced an investment drive for 2007 and 2008 to secure profitable organic growth in future years.
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In a favourable economic environment, the company was able to grow significantly faster than the market during 2006, with sales exceeding €1 billion for the first time. The specialty chemicals enterprise was able to expand its leading market positions due mainly to improved internal performance and greater efficiency. Adjusted for the Pet Products Business Unit sold in June 2006, consolidated revenue rose by 14.2% compared with 2005 to reach€1,002.7 million.
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In spite of substantial increases in energy and commodity costs, all core areas of activity reported positive earnings trends. Operating profit (EBIT) rose by 23.9% to €83.4 million, even though non-recurring extraordinary items totalling €9.6 million had a significant negative impact on earnings. These included the costs of settling a patent lawsuit in the US (€6.4 million) and provisions for remediation of a former production site (€3.2 million). Adjusted for these extraordinary effects, the EBIT rose by as much as 38.3% to €93 million. Earnings before interest, taxes and depreciation (EBITDA) rose by 15.5% to €122.4 million. Compared with 2005, profit for the year increased by 4.5% to €55.5 million. Account should however be taken of the fact that the profit for 2005 included proceeds of €26.2 million from the sale of the rheological and Copisil operations, whereas the 2006 profit includes only €8.9 million as proceeds from the sale of the pet products business.
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At the Annual General Meeting to be held on 1 June 2007, the Supervisory Board and Managing Board will again be proposing a dividend of €1.00 per share. In view of the company's 150th anniversary this year, the Supervisory Board and Managing Board will also be proposing an additional special dividend of €0.10.
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Reporting a rise of 6% to €880.6 million, total assets increased at a slower rate than sales. Compared with 2005, the equity ratio was up from 35.2% to 37.3%. Mainly as a result of acquisitions, the number of Group employees increased by 357 to 4,779 at 31 December 2006. It was possible to further improve the company's innovative strength in 2006 based on targeted investment in research and development (R&D). As a result, R&D costs rose by €3.4 million to €37.7 million and capital expenditure by 20.0% to €69.1 million, the R&D ratio reaching 3.7% and the investment ratio rising to 6.9%.
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Both divisions contributed to the growth in revenue and profit registered in 2006. Thanks to the positive economic climate, the Adsorbents Divisions, which mainly supplies specialty chemicals to the food, detergent, paper, construction, foundry, packaging and logistics industries, was able to boost sales by 12.0% to €533.6 million, after adjustment for the Pet Product Business Unit sold in June 2006. As a result of increased efficiency and productivity, as well as the launch of new higher-margin products, the divisional EBIT outperformed sales, climbing by 15.3% to €44.5 million. The Catalysts Division, which supplies catalysts for efficient manufacture of chemical and petrochemical products and for environmental protection, as well as specialty water-treatment chemicals, was able to improve sales by 16.9% to €469.1 million, due mainly to the higher demand for industrial catalysts. Its EBIT increased by 29.0% to €70.3 million.
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In 2006, 80.3% of Group sales were generated with customers outside Germany, the demand for Süd-Chemie products having risen strongly in all key regions. In 2006, business growth was particularly dynamic in Europe (including Germany), Asia, the Middle East and Africa. Sales in Germany rose by 15.7% last year to reach €197.9 million. This represented 19.7% of consolidated sales after 19.5% in 2005. Apart from positive business activity on the domestic market, the increase was also due to Group companies consolidated for the first time. Sales throughout the rest of Europe rose by 20.2% to €269.2 million, while total European sales increased by 1.6 percentage points compared with 2005 to 46.6%. Sales in Asia and the Middle East climbed by €28.2 million to €248.9 million, representing almost 25% of total Group sales. A marked rise in sales of 26.5% to €75.3 million was reported in Africa, increasing its share of Group sales to 7.5%. Sales in the Americas rose by €10.8 million to €201.9 million.
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Optimistic outlook and ongoing investment in future technologies
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In view of the prevailing confidence in Süd-Chemie's key markets, its excellent market positions and the good start to the year, the company's Managing Board is expecting another highly-positive performance in 2007. Organic sales growth of at least 5% to €1.05 billion is anticipated for the current year, with operating profit (EBIT) again increasing at a higher rate of at least 10%.
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In order to promote rapid business expansion and continue to increase the Group's innovative strength, Süd-Chemie is launching an investment drive in 2007. Amounting to €107 million, the investment volume (excluding financial assets) approved by the Supervisory Board for 2007 is more than 50% above the level of 2006. Investment will therefore exceed depreciation by 140% in 2007. Some two thirds of the envisaged investment will flow into new product launches and capacity expansion, forming the basis for ongoing dynamic organic growth. A similar investment volume is scheduled for 2008.
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Key projects targeted by future investments include expansion of the catalyst research laboratories at the Heufeld site, expansion of the Moosburg production facilities for hydrotalcite, a heavy-metal-free PVC stabiliser, building up the diesel-exhaust catalyst business with the automobile industry in Germany, expansion of the Canadian lithium iron phosphate production for lithium-ion batteries, used for instance in hybrid drives, and construction of a plant to manufacture catalysts for gas-to-liquid operations in Qatar.
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Enquiries to:
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Süd-Chemie AG
Patrick Salchow, Jochen Orlowski
Corporate Public Relations
Tel. +49 (0) 89 5110-250, -247
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Statements relating to future events
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This report contains statements relating to future events based on current estimates made by the management with respect to prospective developments. Such statements are subject to uncertainties and risks which Süd-Chemie is neither able to control nor accurately assess, including for instance future market conditions and the economic environment, the behaviour of other market participants or governmental measures. Should any one of these or other uncertain or imponderable factors take effect, or should assumptions on which the statements are based prove to be incorrect, the actual results may differ significantly from those explicitly defined or implicitly contained in these statements. Süd-Chemie neither intends nor undertakes a specific obligation to update statements relating to future events in order to adjust these in line with events or developments occurring after the date of this report.
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Süd-Chemie AG (www.sud-chemie.com) is a publicly quoted (Security Identification Number (WKN): 729 200), independent specialty chemical company headquartered in Munich, Germany and operating on a worldwide scale. Key markets served by its Adsorbents Division include the consumer-goods, packaging and foundry industries, as well as the paper and plastics industries. Products manufactured by the Catalysts Division offer solutions for water treatment, petrochemicals processing, energy storage and hydrogen production, as well as off-gas purification. The common denominator of all its products and innovations is the efficient and sparing use of natural resources to enhance the quality of life for humans and the environment. Süd-Chemie generated sales of just over €1 billion in 2006, approx. 80% of these outside Germany. At the end of 2006, the group employed approximately 4,800 people at its 70 sales and production sites worldwide. Süd-Chemie is celebrating its 150th anniversary in 2007.
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