Fine Chemicals Hit Degussa

Degussa is taking third-quarter asset-valuation charges of nearly $1 billion on its fine chemicals activities. The company is also stepping up restructuring of these operations. Involved are three fine chemicals businesses-building blocks, exclusive synthesis and catalysts, and peroxygen chemicals. Much of the charge stems from the fine chemicals firm Laporte, acquired in 2001. Degussa says that, contrary to previous assessments, the fine chemicals business situation has “deteriorated steadily this year in the wake of considerable overcapacity in the sector. At the same time, there has been a further increase in competitive pressure, especially from Asian suppliers.” The company will step up restructuring in fine chemicals “significantly,” resulting in an additional expense of roughly $25 million this year and bringing restructuring costs for fine chemicals in 2004 and 2005 to just over $120 million.