Coatings - AkzoNobel

CHEMICALS
Rudy M.J. van der Meer
Millions of guilders 1998 1997
Net sales 7,480 7,575
Operating income* 705 730
Depreciation and amortization 583 554
Gross cash flow 1,288 1,284
Expenditures for PP&E 612 579
R&D expenditures 228 229
Invested capital at year end 5,692 5,850
Key ratios
Operating income*
as percentage of:
– net sales 9.4 9.6
– invested capital 12.2 12.6
Net sales/invested capital 1.30 1.31
Expenditures for
PP&E/depreciation 1.1 1.1
Number of
employees at year end 14,100 13,100
* Before nonrecurring items.
21%
3%
7%
6%
6%
1998 business unit sales*
(NLG 8.3 billion)
Pulp & Paper Chemicals
Functional Chemicals
Surface Chemistry
Polymer Chemicals
Base Chemicals
Catalysts
Salt
Plastics and Processing Additives
Energy
19%
15%
14%
9%
29% 29%
* Including sales of Plastics and Processing Additives on a full-year basis.
44
7%
25%
SALES AND INCOME
1998 net sales* 1998 ne
by country of by origin count
The Netherlands The Neth
Germany Germany
Sweden Sweden
Other European Other countries Eu
USA and Canada USA and
Other regionsOther
reg
7%
8%
25%
Chemicals achieved a volume growth of 3 percent,
while lower average selling prices and changes in
exchange rates each had a negative effect of
1 percent. Including the net negative effect of
acquisitions and divestments (2 percent), Chemicals’
sales amounted to NLG 7.5 billion, slightly below
1997. Excluding the divestment of Salt America in
1997, operating income before nonrecurring items
of NLG 705 million was virtually on a par with the
prior year.
Results of Polymer Chemicals and Functional
Chemicals surpassed the previous year’s record
levels due to higher volumes sold. Base Chemicals
also did better. Surface Chemistry’s earnings were
unchanged from 1997, despite a weak market in
Asia. Operating income of Pulp & Paper Chemicals
was lower than in 1997 due to a depressed market
situation for Bleaching Chemicals in the United
States. Catalysts has made decisions to streamline
certain manufacturing units—particularly for
intermediate products—in view of the continuing
decline in its markets. The results of Plastics and
Processing Additives weakened. Earnings of Salt
were also lower but remained satisfactory.
Return on sales was a robust 9.4 percent, close to
the target of 10 percent, despite the weakening
business climate for chemicals. Return on
investment was 12.2 percent, against a 15-percent
target over the business cycle.
▼
18%
13%
8%
For definitions of certain
financial ratios and concepts
see back cover foldout.