Degussa steps up restructuring following impairment charge
As a consequence of 'unsatisfactory business trends' and a 'sharp reduction in earnings prospects' for its fine chemicals activities, Degussa is taking a total impairment charge of Euro 830m on three of its business units: Building Blocks; Exclusive Synthesis & Catalysts and Peroxygen Chemicals.
As a consequence of 'unsatisfactory business trends' and a 'sharp reduction in earnings prospects' for its fine chemicals activities, Degussa is taking a total impairment charge of Euro 830m on three of its business units: Building Blocks; Exclusive Synthesis & Catalysts and Peroxygen Chemicals.
'A large proportion' of the total impairment charge relates to the British fine chemicals group Laporte, acquired in 2001. €710m of the total relates to goodwill and €120m to other assets. No impairment has been ascertained for Degussa's 17 other business units.
The charge will be recognised as a one-off non-cash item in the non-operating result in the third quarter of 2005 and will thus have no impact on cash flow.
Deguss has marked the deterioration of the business situation and market prospects for its fine chemicals activities down to 'considerable overcapacity in the sector'. It will consequently be 'significantly stepping up' the restructuring of its fine chemicals activities, resulting in additional non-operating expenses of €20m in 2005, and bringing total restructuring costs for fine chemicals activities in 2004 and 2005 to €100m.
However, 'in view of the good overall development of the other business units, the company is maintaining its outlook for 2005, anticipating a slight year-on-year improvement in both sales and EBIT.