Ciba's first year sees profits almost double
15 Jan 2000
It's been an eventful year for Ciba Specialty Chemicals. Its first year after being demerged from the Swiss life-sciences giant Novartis has also seen its first major acquisition Bradford's own Allied Colloids and, as its management announced in London recently, a near-doubling in profits.
Exceptional charges relating to the demerger amounted to SFr373 million (£155 million). Excluding this, Ciba's net income rose by 84 per cent, to SFr571 million (£237 million), on sales up 19 per cent at SFr7.8 billion (£3.2 billion).
'Our strong results during our first year of operations clearly demonstrate our ability to reach our performance targets,' commented chairman Rolf Meyer. The company is poised to meet the targets set on demerger, he added; these are 'based on the results of the top performers in the specialty chemicals industry.'
The strong performance resulted from a combination of cost-cutting and business focus, the company claimed. Sales volumes increased by 12 per cent, it said, which offset price reductions caused by the weakness of the Swiss franc and the effects of divestments. The economic problems in Asia which accounts for about a fifth of the group's sales did not have a significant effect, the company claims; in fact, Eastern hemisphere sales, which include Africa and the Middle East, were up by 16 per cent. However, the company made a SFr70 million (£29 million) provision to write-down assets in southeast Asia.
Research and development costs fell by over SFr20 million (£8.5 million) to SFr302 million (£125 million), as a result of the transfer of R&D responsibility from the corporate organisation to the divisions. This 'led to lower infrastructure and support costs along with a stronger business focus,' the company claims.
Allied Colloids wasn't the only acquisition during the year. The additives division has made two acquisitions the Prochimica photoinitiator business in Italy, and the US-based additive pre-blend business of Mallinckrodt. The performance chemicals division was boosted by two product lines bought from Dow Chemical. Other investments included the pigments business doubling its capacity for transparent pigments by building a new plant in Delaware; the opening phases of a project to make granular classical pigments in Paisley, Scotland; and new laboratories to research high-performance pigments in Newport, Rhode Island.
