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Stability of volumes reflecting priority given to prices: Rhodia
04 Aug '08
5 min read
Novecare saw solid demand across all segments. Industrial Formulation volumes were flat, with growth in Asia and Latin America compensating for the slowdown in the US market. Strong price rises more than offset raw material and energy cost increases.
The Enterprise was impacted by a €(5) million negative non cash Forex conversion effect. Market trends are expected to remain positive throughout 2008, allowing for further price increases.
As expected, Silcea saw a significant 30% improvement in recurring EBITDA versus the first quarter of 2008, reflecting new price increases, especially in Silica and Rare Earths. Fixed costs were up versus the second quarter of 2007 resulting from growth projects and the new diphenols facility in China.
Silcea was impacted by a €(5) million negative Forex effect. €32 million of recurring EBITDA was generated from Carbon Emissions Reduction credits (CERs) versus €29 million in the second quarter of 2007. The cogeneration business is traditionally slow in the second quarter.
For the full year 2008, Rhodia expects to produce 13 million tons of CERs. 92% of these credits have been secured at €15.2/ton. Price rises more than offset the increases in raw material and energy costs. The business was impacted by a substantial negative € (7) million Forex impact.
Current initiatives are expected to deliver a significant recurring EBITDA improvement starting in the third quarter of the year. Eco Services' strong price rises more than offset rapidly increasing raw material (sulf ur in particular) and energy costs. The non cash negative Forex conversion was €(4) million.
In the coming months, Rhodia's strong pricing power should continue allowing sulfur cost increases to be fully offset.
4. Outlook:
In the second half of the year, demand levels should remain satisfactory with the third quarter expected to be traditionally lower reflecting the usual seasonality in continental Europe of Polyamide and Silcea, as well as CER sales phasing.
The rise in raw material costs is expected to continue. Rhodia will pursue its policy to give priority to prices over volumes, to defend the profitability of all its businesses.
Current conditions prevailing, the Group is confirming its 2008 full year objectives:
• Recurring EBITDA should be within 5% of the level achieved in 2007
• Earnings per Share should increase versus 2007
In addition, solid generation of Free Cash Flow in the second half of 2008 and the disposal of the Isocyanates business will allow Rhodia to further reduce its Net Debt versus the end of 2007.
The Enterprise was impacted by a €(5) million negative non cash Forex conversion effect. Market trends are expected to remain positive throughout 2008, allowing for further price increases.
As expected, Silcea saw a significant 30% improvement in recurring EBITDA versus the first quarter of 2008, reflecting new price increases, especially in Silica and Rare Earths. Fixed costs were up versus the second quarter of 2007 resulting from growth projects and the new diphenols facility in China.
Silcea was impacted by a €(5) million negative Forex effect. €32 million of recurring EBITDA was generated from Carbon Emissions Reduction credits (CERs) versus €29 million in the second quarter of 2007. The cogeneration business is traditionally slow in the second quarter.
For the full year 2008, Rhodia expects to produce 13 million tons of CERs. 92% of these credits have been secured at €15.2/ton. Price rises more than offset the increases in raw material and energy costs. The business was impacted by a substantial negative € (7) million Forex impact.
Current initiatives are expected to deliver a significant recurring EBITDA improvement starting in the third quarter of the year. Eco Services' strong price rises more than offset rapidly increasing raw material (sulf ur in particular) and energy costs. The non cash negative Forex conversion was €(4) million.
In the coming months, Rhodia's strong pricing power should continue allowing sulfur cost increases to be fully offset.
4. Outlook:
In the second half of the year, demand levels should remain satisfactory with the third quarter expected to be traditionally lower reflecting the usual seasonality in continental Europe of Polyamide and Silcea, as well as CER sales phasing.
The rise in raw material costs is expected to continue. Rhodia will pursue its policy to give priority to prices over volumes, to defend the profitability of all its businesses.
Current conditions prevailing, the Group is confirming its 2008 full year objectives:
• Recurring EBITDA should be within 5% of the level achieved in 2007
• Earnings per Share should increase versus 2007
In addition, solid generation of Free Cash Flow in the second half of 2008 and the disposal of the Isocyanates business will allow Rhodia to further reduce its Net Debt versus the end of 2007.
Rhodia
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