If winter comes....
Spring is sprung, the grass is riz – I wonder where the upturn is.
If you believe everything you read or hear in the media, then the answer is 'just around the corner'. This will, no doubt, come as a relief to many large companies, including Bayer and BASF, both of whom announced a set of annual results in March that could at best be described as disappointing. And although BASF attributed the decline in sales in large part to the disposal of its pharmaceutical operations, without the extraordinary income of €6bn (US$5.3bn) this sale added to the coffers to enable the company to buy back shares and reduce its indebtedness, the overall figures could have looked a lot worse.
There is no denying that 2001 was an unprecedented year by any standards, and showed how a whirlwind of political and economic changes can upset the best-laid plans of even the bluest of blue-chip companies. For Bayer the chill wind of economic downturn was compounded by the heavy cost of the withdrawal of Lipobay/Baycol from the market, and somewhat surprisingly, the company insists it has made no financial provision in subsequent years for any litigation that may follow in the US. For BASF, the sting in the tail of the year was the imposition of a €200m ($176m) fine for its part in the vitamins cartel.
Both companies are well into a programme of restructuring that should see them favourably placed to take advantage of the eventual economic upswing, but to deflect a massive corporation from its course is a bit like trying to manoeuvre a supertanker in a storm at sea: a slow, cumbersome process requiring strength, determination and not accomplished without creating a lot of waves. It is not really a surprise, therefore, that neither company has yet detected any real improvement in its situation in 2002, despite making optimistic noises about positive signs.
Shedding a welcome ray of sunshine through the storm clouds is Avecia. The budding biologics sector seems to be on the point of bursting into flower, and with its $100m (€113m) investment, Avecia will be in a good position to harvest the fruits of progress. Even a relatively small enterprise like UK-based contract research company Peakdale is demonstrating enormous confidence in its future by sowing the seeds of prosperity.
As every gardener knows, there is still plenty of time for a sharp, late frost to nip new growth in the bud and April showers can still flatten many an emerging seedling. But with a little careful nurturing, the tender shoots of recovery could start to flourish. And for those who did not recognise the words of Percy Bysshe Shelley's Ode to the West Wind in the headline, the full quotation is 'If Winter comes, can Spring be far behind?'.