Rhodia braces against economic downturn

ERJ staff report (RD)

Paris, France - Rhodia Silcea, the silicas and diphenols subsidiary, has experienced a slowdown across its three business segments in the fourth quarter (Q4) 2008.

Volumes were down by 23 percent, linked to the global crisis in the automotive and electronic markets, and to a lesser extent, to the downturn in other industrial end markets, the company said 25 Feb.

On a full year basis, Silcea net sales increased to Euro 746 million with higher selling prices accounting for Euro 54 million. The company said its pricing power partly offset the impact of raw material and energy inflation of Euro 61 million, “although the negative impact of Forex caused recurring EBITDA to decrease to Euro 106 million,” Rhodia added.

In Q4, Rhodia's total net sales of Euro 1126 million were down by 3.5 percent on Q4 2007, primarily because of a 17 percent fall in volumes reported by Polyamide, Silcea and Novecare units. The company said its other units showed better resilience against the economic downturn and Rhodia “continued to exhibit a good pricing powering Q4” posting overall 11 percent price increase of Euro 132 million.

Full year net sales rose by 2.9 percent to Euro 4763 million, prices increased by 9.5 percent - amounting to Euro 440 million - more than offsetting massive raw material and energy cost increases, the company said. The company reduced net debt by 12 percent to Euro 1311 million by 2008 year-end.

“2008 was a year of contrasts. After earlier spikes in raw material and energy prices, commodity prices have dropped sharply in the last part of the year,” said Rhodia ceo Jean-Pierre Clamadieu. “At the same time, a sudden drop in demand over the last quarter prevented us from benefiting from the positive trends in raw materials and energy,” he added.

“We are implementing new structural cost-cutting measures to save Euro 150 million by 2011, thus improving our competitive position,” concluded Clamadieu.

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Press release from Rhodia