Despite a testing global economic climate, sales remained steady and earnings before interest and taxes rose for German speciality chemicals company Degussa in the first quarter of 2003.
The satisfactory results allowed the company to uphold its outlook for 2003, anticipating an improvement in sales and the operating result for the core business.
Sales rose by 1 per cent to €2.904 billion in the first three months of 2003, compared to €2.872 billion for the Q1 in 2002. Earnings before interest and taxes (EBIT) increased by 10 per cent to €205 million, up from €187 million for the same period in 2002, and operating result after interest grew from €117 million for Q1 in 2002 to €151 million for the same period in 2003, representing a leap of 29 per cent.
"Degussa is well aligned, and despite the difficult economic situation is clearly keeping to a steady course, " said Professor Utz-Hellmuth Felcht, chairman of the board of management of Degussa, at the company's Annual Shareholders' Meeting earlier this week.
For Felcht the company's key strategy of aligning its core business to robust operations, with low cyclical exposure and expanding its restructuring programme, already began to prove its worth in 2002. The systematic continuation of this strategy will again, maintains Felcht, underpin Degussa's operating profit in the current financial year.
But a guarded optimism was certainly implicit in the chairman's words as he looked towards the rest of 2003.
In his opinion it is extremely difficult to say how the global economy will develop in the 2003 financial year, particularly in view of the uncertainties that must be considered. For Felcht, in all probability, stagnation on a macroeconomic level has to be faced in the first half-year, and it is fairly unlikely that the second half will see a reversal of this trend. But he remained optimistic.
"Despite all uncertainties, we are confident that our core business will develop well this year, and continue to anticipate an improvement in sales, EBIT and operating result in our core business," he said.
The company is in the process of disbanding its Health & Nutrition division as part of a reorganisation of its food and feed activities. The Flavors & Fruit Systems, BioActives, and Texturant Systems activities will be the focus of targeted expansion under a new business unit, expected to have sales of around €600 million (comparable to other Degussa units).