Business News

Economic crisis burdens growth course of ALTANA in 2008

Thursday 19. March 2009 - Sales and earnings declined slightly; Fourth quarter overshadows full year results; Dividend proposal: 10 cent per share

The specialty chemicals Group ALTANA recorded a slight decline in sales and earnings for the business year 2008. “As of the fourth quarter of 2008, the far-reaching economic crisis has also had a significantly negative impact on our business,” stated Dr. Matthias L. Wolfgruber, CEO of ALTANA AG, at the company’s press conference in Wesel. Despite its robust business model, which covers many industries, customers, and regions, Wolfgruber continued, ALTANA, too, had been caught in the maelstrom of the worldwide economic crisis. “In the new business year, we focus on margins and cash flow, and at the same time continue to invest in future-related and innovation projects. Thus, during this crisis, we are preparing the prerequisites for profitable growth for when the economic climate improves.”

Sales and earnings below prior year
In the business year 2008, ALTANA achieved sales of €1,341.7 million, which is about 3% or €38 million less than in 2007. Adjusted for negative exchange rate effects as well as minor positive acquisition and divestment effects, the operating sales decrease was 2%. Sales diminished in all regions. With sales at €664.8 million, corresponding to nearly half of the company’s total sales, Europe reported a decrease of 2%. In the Americas sales were down by 7%; adjusted for exchange rate effects, however, the decrease was only 3%, with sales at €305.9 million. At €325.7 million, corresponding to a decrease of 1%, sales in Asia almost reached the prior-year level: the development in this region was burdened by the higher than average sales decrease in China (- 6%), primarily in the fourth quarter of 2008.

Earnings before interest, taxes, depreciation and amortization (EBITDA) diminished by 2% from €248.5 million to €242.9 million. Despite the decrease in sales and EBITDA, the EBITDA margin was 18.1% and thus within the mediumterm target range of 18% to 20%. At €170.3 million, the operating income (EBIT) was slightly increased on the prior year (plus 2%) due to lower depreciation and amortization. At €158.7 million, earnings before taxes were significantly down on the prior-year level (€214.3 million). The 2007 figure, however, was influenced by the income from the investment of the sales price for ALTANA Pharma (€55 million).

As of December 31, 2008, the ALTANA Group employed 4,791 people; in 2007 the number of employees was 4,646. This increase includes 33 employees from the acquisition of Dick Peters on December 30, 2008. At €107.9 million, investments in 2008 were significantly higher than in 2007 (€91.4 million). This increase is mainly due to the new distribution center of BYK-Chemie in Wesel, the opening of new sites in China, new production facilities at ECKART’s main plant in Güntersthal, as well as the construction of the new headquarters in Wesel. Group-wide research and development expenditure comprised 5.4% of sales (prior year: 4.9%), which is significantly more than the average for the chemical industry of about 2% to 3%. Around 16% of ALTANA’s employees work in research and development.

Economic crisis affects all divisions
The BYK Additives & Instruments division was able to increase sales in 2008 by 1% from €445.1 million to €450.5 million. EBITDA amounted to €127.6 million, which is a decrease of 4% compared to the prior year (€132.6 million). The EBITDA margin was 28.3%, following 29.8% in 2007.

At ECKART Effect Pigments sales fell by 3% to €350.7 million. In the previous year sales had been €362.9 million. EBITDA went down to €67.2 million (previous year: €79.7 million); this corresponds to an EBITDA margin of 19.2% after 22.0% in 2007.

Sales of ELANTAS Electrical Insulation dropped 7%, from €350.8 million in 2007 to €326.5 million in 2008. EBITDA decreased by 6% to €49.7 million following €53.1 million in the prior year. At 15.2%, the EBITDA margin increased slightly on the prior-year level (15.1%).

The ACTEGA Coatings & Sealants division achieved sales of €214.0 million in 2008, corresponding to a decrease of 3% on the prior year (€221.6 million). EBITDA went down by 8%, from €26.7 million to €24.5 million. The EBITDA margin diminished from 12.0% to 11.4% in 2008.

Dividend proposal considers difficult economic environment
Against the background of the economic crisis the dividend proposal is oriented not only to giving shareholders an appropriate share in the company’s development, but also to the overall economic environment. For this reason, the Management and Supervisory Boards will propose to the Annual General Meeting on May 12 in Duisburg to distribute a dividend of 10 cent per share. At 13%, the payout ratio would be significantly lower than that of the previous year (33%), but the company would strengthen its financial stability.

The Management and Supervisory Boards conclude to retire treasury shares
With the approval of the Supervisory Board, the Management Board retired the company’s 4,302,104 treasury shares, representing a proportionate amount of the share capital of €1 per share, on March 17, 2009. ALTANA’s share capital was decreased accordingly. The shares had originally been acquired to be used within the framework of employee incentive programs. SKion GmbH thus now holds more than 91% of the share capital and the voting rights in ALTANA AG.

Concrete outlook for 2009 not possible
ALTANA expects a difficult market environment for the current business year. The company had already prepared itself for this situation in the late summer of 2008 with a set of measures to improve efficiency and cut costs. The first weeks of the business year 2009 confirm the negative trend. However, the company still foresees good growth prospects for its markets in the medium and long term. Against the background of the continuing uncertainty on the worldwide markets, however, ALTANA cannot provide a concrete outlook for the current business year.

ALTANA Group
(in € million) 2008 20071
Change
in %

Sales – total 1,341.7 1,380.4 -3

Sales by division

Additives & Instruments 450.5 445.1 1
Effect Pigments 350.7 362.9 -3
Electrical Insulation 326.5 350.8 -7
Coatings & Sealants 214.0 221.6 -3

Sales by region
Europe 664.8 678.0 -2
thereof Germany 231.0 239.6 -4
Americas 305.9 330.6 -7
thereof U.S. 203.7 222.5 -8
Asia 325.7 329.7 -1
thereof China 141.0 149.8 -6
Other regions 45.3 42.1 7

EBITDA 242.9 248.5 -2
EBIT 170.3 166.6 2
EBT 158.7 214.3 -26
EAT 103.4 138.4 -25

Headcount (Dec. 31) 4,791 4,646 3
1) The figures refer to the continuing operations