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Degussa Presents Interim Report January 1 - June 30, 2006

Published on 2006-08-08. Author : SpecialChem

  • Perceptible volume and price rises
  • Sales advanced 16 percent year-on-year while EBIT grew by 19 percent
  • Strong improvement in Group net income
  • Outlook for 2006 unchanged: year-on-year rise in sales and EBIT

"The favourable trend reported for the first months of the year has continued and we were able to grow business appreciably in all regions. Thanks to higher volumes and successful price rises, the operating profit improved considerably," commented Dr. Klaus Engel, Chairman of the Board of Management of Degussa AG, Dusseldorf, on Tuesday when the company published its interim report on the first half of 2006.

Sales up 16 percent

Degussa lifted sales substantially from €4,712 million to €5,456 million in the first six months of 2006. It was especially pleasing that 7 percentage points of this came from higher selling prices while 5 percentage points were due to higher volumes. Changes in the scope of consolidation accounted for a further 3 percentage points of the increase in sales and exchange rate movements for one percentage point.

EBIT 19 percent higher

In the first six months, EBIT (earnings before interest and taxes) increased to €437 million, compared with €368 million in the first half of 2005. Earnings were boosted by successful price rises, high capacity utilization and effective cost-savings. However, the sharp hike in raw material and energy costs had a negative impact. In the first six months of 2006 Degussa's internal raw material cost index was 17 percent higher than in the same period of 2005, while energy costs were around 23 percent higher.

Strong improvement in Group net income

Group net income after minorities increased by 123 percent from €168 million in H1 2005 to €375 million in H1 2006. As a result, earnings per share improved to €1.82 (H1 2005: €0.82).

Outlook for 2006 unchanged: year-on-year rise in sales and EBIT

Degussa expects the good operating performance to continue in the coming months. However, a further rise in raw material and energy costs could trim profit margins. The company intends to respond to this by adjusting prices and stepping up cost-savings. Engel: "In all, we still expect to report a year-on-year improvement in sales and EBIT in 2006. However, the high growth rates seen in the first half of the year will drop back in the second half of the year."

Degussa is the global market leader in specialty chemicals. Our business is creating essentials - innovative products and system solutions that make indispensable contributions to our customers' success. In fiscal 2005 around 44,000 employees worldwide generated sales of 11.8 billion euros and operating profits (EBIT) of 940 million euros.

Source: Degussa

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