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RAG's subsidiary Degussa is on a successful course

Published on 2006-11-20. Author : SpecialChem

  • Perceptible volume and price rises
  • EBIT up 17 percent year-on-year in the first nine months
  • Strong improvement in Group net income
  • Outlook for 2006: sales and EBIT should rise more than 10 percent year-on-year

"Degussa's good operating earnings performance has continued in the third quarter of 2006," commented Dr. Klaus Engel, Chairman of the Board of Management of Degussa AG and Member of the Board of Management of RAG Aktiengesellschaft, in Dusseldorf. Backed by the good global economic climate, the specialty chemicals company increased its business in all regions as a result of strong demand. Moreover, higher raw material costs were increasingly recouped by raising selling prices.

Degussa lifted sales by 11 percent year-on-year from €2,497 million in the third quarter of 2005 to €2,776 million in the third quarter of 2006. Overall, sales increased 14 percent to €8,232 million in the first nine months of 2006. 7 percentage points of this rise came from higher selling prices, 5 percentage points came from volume growth and a further 2 percentage points were attributable to changes in consolidation.

In the third quarter, EBIT (earnings before interest and taxes) was €242 million, a perceptible increase compared with both the third quarter of 2005 (€211 million) and the first two quarters of 2006 (Q1: €219 million; Q2: €218 million). EBIT grew by 17 percent to €679 million in the first nine months of this year, driven by higher selling prices, increased volume sales, good capacity utilization and cost savings.

Nevertheless, earnings were held back by further rises in raw material and energy costs. In the nine months to September 2006 Degussa's internal raw material cost index was 17 percent higher than in the first three quarters 2005. Energy costs also rose 17 percent in this period.

Group income before income taxes improved to €1,870 million in the first nine months of 2006. Alongside the improvement in operating earnings, this was chiefly attributable to book gains on the divestment of the Construction Chemicals and Food Ingredients activities. The year-back figure was minus €392 million as a result of an impairment charge for the fine chemicals operations. Group net income after minority interests thus rose to €1,489 million, compared with a net loss of €542 million in the previous year.

Outlook for 2006: sales and EBIT should rise more than 10 percent year-on-year

Dr. Engel: "We assume that the good operating trend will continue in the fourth quarter. For the year as a whole we anticipate that sales and EBIT will be more than 10 percent above last year's level."

Degussa - a wholly owned subsidiary of the RAG Group - 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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