Fast progress in becoming a pure specialty chemicals company
13-Nov-2002
The consistent transformation of the Degussa Group of Dusseldorf, Germany, into a purely specialty chemicals company is practically complete. The equivalent of about 90 percent of the total sales of non-core operations has been sold, with proceeds totaling some 3.7 billion Euro to date. Degussa is using these funds to purposefully expand growth areas within specialty chemicals and to reduce debt. This had been trimmed to slightly below 2.4 billion Euro by September 30, which is some 700 million Euro less than at the end of 2001.
In the coming years, the Group will be placing its strategic focus on enhancing profitability by means of restructuring and process optimization. For example, 2,800 of the 4,000 jobs that Degussa aims to cut back all over the world by 2004 will have been shed in a socially compatible manner by the end of 2002. Above and beyond this, implementation of the comprehensive best@chem profit improvement program is proceeding according to plan. "We aim to realize annual savings of 500 million Euro a year as of 2004, and there is every sign that we will achieve this objective," explained Degussa Management Board Chairman Prof. Utz-Hellmuth Felcht at the Group's autumn press briefing on Monday.
The Management Board Chairman also emphasized that Degussa is keeping to its restrictive investment policy. Accordingly, the capital expenditure budget for 2002, which was originally set at 1.4 billion Euro, has been modified downwards to 1 billion Euro, while projected capital expenditure for 2003 has been reduced from 1.1 billion Euro to 950 million Euro. Nevertheless, capital expenditure remains higher than depreciation. As Prof. Felcht stated: "We are still aligned to profitable growth." Now that classical reengineering approaches are either underway or complete, Degussa expects cross-Group process innovation to be a stimulus of sustainable organic growth in future. First and foremost, the targeted organic growth rate of 5 percent on average per year is to be achieved by strengthening the linking of knowledge within the Group.
Parallel to this, Degussa will be fostering the expansion of its core operations by means of targeted acquisitions. Strategic growth fields in this respect particularly concern the Specialty polymers and Health & Nutrition divisions.
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