Akzo Nobel profits up on divestment windfall
warned that 2005 would be tough and that further divestments in its
chemicals portfolio are planned.
The pharmaceuticals and chemicals group said net income rose 42 per cent year-on-year to €856 million, but this was helped by its €1 billion divestment of chemical catalysts and other elements of its chemical portfolio. Excluding this contribution, net income would have fallen 14 per cent to €90m.
And more divestments are to come, with another €750m-worth of businesses - including ink and adhesive resins, oleochemicals, salt specialties, PVC additives and its methyl amines/choline chloride activities - on the block.
Overall, sales fell 3 per cent to €12.7 billion, hit by currency factors and the divestment programme.
Pharma sales declined 9 per cent, although chief executive Hans Wijers said that margins held steady at 16 per cent, thanks to cost savings programmes. The effect of generic competition to Akzo's antidepressant Remeron (mirtazepine) in the US slowed toward the end of 2004, but in Europe, sales erosion started in the second half. On a more positive note, revenues from hormonal products rebounded in the fourth quarter, according to Akzo, and the firm's new contraceptive NuvaRing saw its turnover double. However, operating profit at the unit still fell 25 per cent to €522 million.
The performance of Akzo's contract manufacturing division Diosynth is hard to gauge now that it has been subsumed into the wider structure of Organon, Akzo's pharmaceutical business. But the company did divulge that Diosynth's results fell 'significantly' to breakeven level in the fourth quarter, and continued to be affected by overcapacity in the marketplace for contract manufacturing of active pharmaceutical ingredients (APIs).
In the core chemicals business, operating profits rose 3.8 per cent to €354 million which Wijers said was "its best performance in several years."
