Rhodia results underline tough conditions but restructuring helps

By Simon Pitman

- Last updated on GMT

Related tags Profit

Chemicals company Rhodia says that its operational profits were boosted by increased operating profits, despite the fact that sales fell.

The company, which manufactures a range of chemicals for the consumer industries, including high performance ingredients for the personal care category and silica for the fragrance category, said that Q4 sales fell 5.2 percent on a like-for-like basis to €1.14bn.

The result for the full year was weaker, reflecting the even tougher trading conditions for fine chemical providers during the first half of 2009, with sales falling 18 per cent to €4.03bn.

Personal care provides more solid performance in 2009

Breaking the full year sales figure down, the Novecare division, which supplies high-performance ingredients to the cosmetics industry, registered a fall in sales of 14.8 per cent to €827m.

The company said that the its home and personal care segment within this division had ‘remained resilient’ throughout the course of the year, boosted by the integration of the Mcintyre business.

The company’s operating profit results were healthier, with the recurring EBITDA Q4 figure rising 42 per cent to €200m, while the full year figure fell by 28 per cent to €487m.

Pricing boosts profits

The company said that the vast improvement in profits during Q4 was largely down to ‘effective price management’ combined with the fact that the falling cost of raw materials and energy both helped to generate a positive impact.

“We ended 2009 with record profitability in the last quarter and significantly reduced debt resulting from a high level of free cash flow,”​ said company CEO Jean-Pierre Clamadieu.

However, despite the gains in profitability, Clamadieu underlined that trading conditions would remain mixed under the continuing economic volatility.

European market shaky

“Global economic conditions have improved but growth in Europe remains uncertain. We will therefore maintain our emphasis on operational discipline and cash generation while aiming at a significant improvement in our profitability.”

Following in line with the increased profitability of the fourth quarter, the company said it believes the EBITDA results will continue to grow in 2010, resulting in a figure that is forecast to be around 35 per cent higher than the year-end result for 2009.

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