Improvement Seen Across Industry

Across the board, European chemical companies are reporting higher first-quarter sales than last year, paced by Kemira, with a 37% increase in sales, and BASF, with a 24% gain.

Kemira's sales increase reflects the April 2005 acquisition of Finnish Chemicals, and BASF's growth is being driven by higher sales volumes and price increases in both its chemical operations and its oil and gas segment.

As BASF Chairman Jürgen Hambrecht noted at his company's annual meeting, "Our business has developed very positively since the beginning of 2006, and the level of orders remains extremely robust."

Similarly, at Bayer, Germany's other giant, Chairman Werner Wenning observed that the company had a record-breaking first quarter in 2006, with operating profits reaching an all-time high.

Net earnings declined from first-quarter 2005 levels for four companies: Akzo Nobel, Bayer, Ciba Specialty Chemicals, and Solvay. All four, however, reported strong improvements in operating profits. The net declines, they said, reflect a combination of raw material and restructuring costs.

As Brendan Cummins, Ciba's chief operating officer, pointed out, "Our profitability continues to be impacted by increases in raw material costs, utility costs, and social benefit costs."

Even financially beleaguered Rhodia managed to eke out a $10.9 million net profit from continuing operations, a dramatic turnaround from a loss of nearly $70 million on comparable operations in 2005. The French firm did report a final net loss for the quarter. Discontinued operations generated a loss of $53 million, reflecting in part the final impact of Rhodia's sale of its pharmaceutical custom synthesis business.