Sales in local currencies up in Asia, Americas - Ciba

19 Aug '08

5 min read

Ciba announces half year results and strategic moves to reshape portfolio.

- Good sales growth in Asia in first half year, some slowdown in Europe
- Operational profitability in Q2 heavily impacted by raw material and energy costs
- Significant sales price increases taking effect from mid June
- Goodwill impairment of CHF 595 million in Water & Paper Treatment
- Strategic options under evaluation for paper and publication inks businesses
- Acquisitions and JV planned for Q3 to strengthen Plastic Additives and Coating Effects
- New industry focused operating model to be effective early 2009
- News release Ciba Financial Half Year Results 2008 in HTML (without tables)
- News release Ciba Financial Half Year Results 2008 (including tables) [PDF, 97 KB]
- Ciba Half Year 2008 financial report [PDF, 338 KB]

Brendan Cummins, Chief Executive Officer comments: “We are taking significant action to reshape the portfolio and focus on areas of technological core strength in plastics, coatings and water. A number of options are being evaluated for the paper and publication inks businesses, which are not performing in line with our expectations and require additional strategic action to improve their market positions. Decisions will be taken on an appropriate course of action for both businesses in the next few months. In accordance with accounting requirements, we have also adjusted goodwill levels for the Water & Paper Treatment segment, which brings us into a loss for the second quarter.”

“In Plastic Additives we are in the process of agreeing a joint venture to expand our plastics capability in the fast growing region of the Middle East and we are planning to make acquisitions in the next few weeks that will strengthen our Coating Effects business. These moves will enhance already strong market positions in these segments.”

Brendan Cummins, Chief Executive Officer comments: “The half year results were unquestionably disappointing. We experienced intense margin pressure from the escalation of raw material and energy costs, which went up 10 percent in the second quarter alone, with the heaviest impact in April and May. However, by mid June, we were able to offset these higher costs with sales prices increases and we are seeing further significant sales price increases coming through in July.”

“Business conditions going into the second half clearly remain a challenge. We are experiencing a deterioration in some markets, particularly in Europe, however, we are also seeing continued robust growth in other regions, notably in Asia, where we have a strong market position. Overall, based on our current market forecasts, raw material costs and foreign exchange rates; we believe the outlook we communicated at the first quarter, is achievable with the margin improvements that are coming through from the increased sales prices in the second half. However, should business conditions worsen further, the results may be lower than we are currently anticipating.”

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