Issue Date: November 10, 2008
Economic Crunch Hits Europeans
IF EUROPEAN chemical companies ever had any hope of avoiding the spreading economic crisis, they are abandoning it. Chief executives and financial officers reporting third-quarter results owned up to being in what Clariant CEO Hariolf Kottmann called "an extremely challenging macroeconomic environment."
At specialty chemical maker Ciba, CEO Brendan Cummins noted that business conditions "have deteriorated in the third quarter." As a result, he added, the earlier guidance on profitability at Ciba, which is being acquired by BASF, "is no longer applicable."
"The downswing in the economy was increasingly noticeable from September onward," said Kurt Bock, BASF's chief financial officer, when the company announced its third-quarter numbers at the end of October. As a result, BASF will cut more than 1,000 jobs worldwide by 2012, Bock said. Moreover, the company will follow the lead of DSM and AkzoNobel and suspend its share buyback program.
In reporting its results for the quarter, DSM noted that it would reduce inventories via temporary plant shutdowns—the company would not disclose specifics—as a means of addressing the demand rollbacks caused by the credit crunch. DSM's CFO, Rolf-Dieter Schwalb, would not rule out job cuts as the company prepares for "the more difficult market conditions."
Not all companies were gloomy. Bucking the trend, Wacker Chemie said it expects sales and earnings records for 2008, paced by its business in polysilicon for semiconductors and solar cells.
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