Akzo comes in low but above targets in 03
9 per cent slide in net income in 2003 but said the result was
better than expected given the difficult operating environment last
year.
And its active pharmaceutical ingredient (API) business Diosynth looks like it may be facing more restructuring in 2004, after shedding staff at its site in Scotland at the end of last year.
The group's net profit came in at €811 million, ahead of analysts' expectations of around €690 million and bolstered by a payment from Pfizer of €88 million relating to asenapine, a new schizophrenia medication. However, if a one-off restructuring charge of €209 million is taken into account - which includes the cost of shedding 4,080 staff in 2003 - net income came in at €602 million.
Operating income slipped 10 per cent to €1.35 billion as the group suffered from higher pension costs and weaker currencies. Group revenues of €13.05 billion were down 7 per cent year-on-year.
As expected, Akzo took a big hit at its Organon human healthcare division with the loss of US patent protection on its number one product Remeron (mirtazepine). For pharma as a whole, full-year sales down 11 per cent to €3.55 billion and operating profit sliding 10 per cent to €692 million.
Earnings at Diosynth were impacted by a deteriorating market for its manufacturing services in both chemical and biological APIs, said Akzo. And the company will also be hit by the problems affecting Organon and faces lower captive demand from this unit.
"To address this situation, additional restructuring programmes are in preparation" at Diosynth, said Akzo, raising the possibility that additional staffing cuts may be on the cards.
Pharma should benefit in 2004 from a new strategy pinned on aggressive cost-cutting, the cooperation with Pfizer on asenapine and the decision to transfer Organon's marketing rights to the antithrombotic Arixtra (fondaparinux sodium) to partner Sanofi-Synthelabo in exchange for a royalty stream.
Akzo's coatings division reported sales of €431 million, down 7 per cent, which its chemicals turnover was down 6 per cent to €324 million in 2003.
Looking ahead to 2004, chief executive Hans Wijers said: "we expect net income, excluding non-recurring items, to be below 2003." However, he noted that this does not take into account planned divestments in the chemicals business.
