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European Earnings

Fourth quarter sinks annual results

by Patricia L. Short
March 2, 2009 | A version of this story appeared in Volume 87, Issue 9

FOR MANY of Europe's chemical makers, 2008's fourth quarter spoiled a year that was on course to set records. Now companies are looking at cuts in spending and jobs just to survive 2009.

That's what happened at BASF, whose annual results press conference was late last week. Sales were up almost 8% for the year because of higher prices in all divisions, Chairman Jürgen Hambrecht said. Operating income "was on course for a new record up to the fourth quarter," he said, but results in all the company's chemical divisions tumbled in the last three months.

At Clariant, mounting restructuring charges contributed to a loss for all of 2008. CEO Hariolf Kottmann warned that Clariant intends to cut 1,000 jobs this year and make no dividend payment. The focus for 2009 will be on cash generation: "Loans are either not available or not affordable in the current financial crisis," he said.

For Solvay, 2008 results showed a marginal decrease in sales and a 46% drop in net earnings. Most of that drop came from investment losses of about $384 million.

Solvay will slash its 2009 capital expenditure budget, spending only on health, safety, and the environment, or on "a very limited number of strategic projects." On the other hand, the company said it would increase R&D spending almost 5% to $755 million in 2009. Roughly three-quarters of that is for Solvay's pharmaceutical business.

In contrast, DSM enjoyed a "record year" in 2008, with rises both in earnings and sales. Still, the poor economy is taking its toll on much of DSM, Chairman Feike Sijbesma said. The company, he added, has "swiftly taken the necessary steps to reduce costs in the affected businesses."


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