Sales and profits down at Ciba

The Swiss specialty chemicals group, Ciba, recorded a worse-than-expected 15 per cent fall in net profit in 2003 to SFr344 million ($275.3 million).

The Basel-based company said in a statement on Tuesday that its sales had also declined by six per cent to SFr6.65 billion.

The firm – which makes products ranging from dyes in compact discs to the pigments that make Ferraris red – said it did not foresee any sustainable improvement in global business conditions.

“There is no change in the business environment,” said Ciba’s chief financial officer, Michael Jacobi, “but we have completed one of the biggest pieces of homework that we needed to.”

During the fourth quarter of 2003, the company temporarily shut plants as part of efforts to cut one of the highest inventory levels in the industry and boost cash flow.

Looking for recovery

Analysts warned that the company’s results did little to suggest long-term recovery was on the way.

“The result was mixed as earnings and sales were not that good, but the free cash flow was surprisingly strong and they reduced debt,” said Bank Leu’s Ulrich Steiner.

“But business is made up of volume and pricing, and there doesn’t seem to be too much of a recovery there, which could worry the market,” he added.

The company said that healthy sales in the Asia-Pacific region, especially China, offset sluggish sales elsewhere.

Analysts believe that the firm’s personal care division, which supplies ingredients for hair conditioners and household cleaning products, is one area where Ciba could expand in future.

Ciba shares have underperformed the European chemicals sector by ten per cent in the last year.

swissinfo with agencies

Key facts

Ciba has reported a 15% drop in full-year net profit to SFr344 million.
The results were well below analysts’ expectations.
The company – one of the world’s largest specialty chemicals firms – has taken steps to combat the economic downturn, such as reducing production capacity.