Hoechst's profits plummet 63 per cent
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.GERMAN DRUGS and chemicals group Hoechst yesterday reported a 63 per cent fall in second quarter earnings as gains in life sciences failed to offset chemicals losses and extraordinary legal charges.
Hoechst said second quarter operating profit fell to 128m euros (pounds 84m) from 349m, partly as a result of its restructuring programme and non- recurring items. Sales fell 2 per cent to 4.6bn euros.
While Hoechst's chemicals businesses suffered from an industry slump, earnings were also burdened by a 129m euro charge in connection with a long-running US class action suit involving its Ticona polymers unit.
The group also took a 31m euro provision to cover the costs of US allegations relating to price fixing at its Nutrinova food additives unit.
Chief financial officer Klaus Jurgen Schmieder said the provision would cover its US liabilities but it was too early to determine whether Hoechst would need to make further provisions for an EU investigation into the allegations.
Analysts had expected Hoechst to report declines, but the fall in operating profit was more than had been generally forecast. Earnings at the group's core Hoechst Marion Roussel (HMR) drugs division were stronger than anticipated, however. "HMR looked strong and the rest looked pretty much in line," said Hans Zayed, a Paribas analyst.
Hoechst, which is merging with Rhone-Poulenc in a deal to create the world's largest drugs and agribusiness group, plans to spin off the lion's share of its remaining chemicals businesses later this year.
Its chemicals operations have suffered in recent quarters amid a downturn in the sector, sparked by last year's emerging market financial crises in Russia and Asia.
Hoechst's Celanese basic chemicals division - its biggest chemicals unit - posted an operating loss of 53 million euros after a 47 million euro profit last year as margins were pressured and raw material prices rose.
The group said it expects a marked increase in second half operating profit at HMR, where operating earnings more than doubled in the second quarter to 318 million euros.
HMR's Allegra/Telefast allergy treatment and its Arava arthritis drug were among a host of new products that helped to drive second quarter growth. Hoechst said operating results at its Agrevo agribusiness joint venture with Schering would be around last year's level. t posted a 23 per cent decline in second quarter operating profit to 87 million euros amid weakness in the North American farming industry.
"Things didn't go to well for Agrevo and with the forecast for the second half, one has to say that Agrevo will have to restructure." said Harald Gruber, an analyst at Julius Baer. (Reuters)
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments