Half-year results: ALTANA below the strong level of the previous year in a challenging environment
Strong investments in research and development, digitalization, and locations worldwide
Sales decline by 4 percent to 1,154 million euros
EBITDA margin reaches 19.2 percent
Forecast for the year as a whole: sales roughly at previous year's level
The specialty chemicals group ALTANA did not reach the strong level of the previous year in the first half of 2019. Due to continued sluggish demand in key industrial sectors, in particular the automotive industry, and the general economic slowdown, particularly in China, sales decreased by 4 percent to 1,154 million euros in the first six months of this year. Adjusted for positive exchange-rate effects, the decline was 6 percent. Earnings before interest, taxes, depreciation and amortization (EBITDA) reached 221 million euros, 12 percent down on the previous year's figure. The EBITDA margin reached 19.2 percent despite a further increase in expenses for research and development.
The Group boosted its spending in this field by 7 percent in the first half of 2019. With a share of sales of also 7 percent ALTANA continues to invest above-average amounts in research and development, including the development of innovative printing technologies.
"ALTANA is a company with substantial financial and innovative strength. Therefore, we can hold our ground even in a difficult environment and continue to invest heavily in our future in order to remain on course for sustained success," says Martin Babilas, Chief Executive Officer of ALTANA AG.
For the second half of the year, ALTANA expects the challenging conditions to persist. Sales for the year as a whole should be at roughly the same level as in the previous year. The EBITDA margin is expected to be at the lower end of the long-term target range of 18 to 20 percent.
Divisions: ACTEGA continues to grow
The largest division, BYK, recorded a decline in sales of 5 percent (7 percent in operating terms) to 535 million euros. The acquisition of Paul N. Gardner Company, completed in July, will contribute to strengthening the instruments business, particularly in America, in the second half of 2019.
The effect pigment specialist ECKART generated sales of 185 million euros. This corresponds to a decline in sales of 9 percent (operating 11 percent). In addition to sluggish demand, particularly from the automotive industry, the discontinuation of trading in white pigments in China contributed to this development as a special effect.
The supplier of electrical insulation materials, ELANTAS, recorded sales of 250 million euros and was thus 4 percent (operating 5 percent) below the previous year's figure, mainly owing to the lack of demand momentum in China.
ACTEGA continued its growth in the first half of 2019. Due to the continuing good demand for coating and packaging solutions from consumer-oriented industries, the division increased its sales by 4 percent to 184 million euros. Adjusted for positive exchange-rate effects, operating sales growth amounted to 3 percent.
Stable development in Europe, sustained high investments in the future
Business developed differently from region to region. Europe, still the region with the highest sales, reached 456 million euros and remained stable overall with a slight minus of 2 percent. Sales in Asia fell by 8 percent to 363 million euros. Adjusted for positive exchange-rate effects, the decline in operating sales was 10 percent, mainly owing to the current low demand in China. Operating sales in America decreased by 6 percent. Due to positive exchange-rate effects, ALTANA almost reached the previous year's figure with only a slight decrease of 1 percent to 316 million euros.
ALTANA continued to expand its sites in all regions of the world in the first half of the year. In April, the Group opened a new integrated site for BYK in Shanghai. In June, a new ACTEGA innovation center commenced operations in Grevenbroich. ALTANA is currently significantly expanding the BYK site in Gonzales (Texas) with 50 million euros and the ACTEGA site in Bremen with around 20 million euros.
At the same time, ALTANA is investing heavily in digitalization. For example, two new e-commerce platforms went online at BYK and ACTEGA in the first half of the year. Over the next three years, the specialty chemicals group plans to spend almost 40 million euros on this future-oriented area.
At mid-year 2019 (June 30), ALTANA had 6,436 employees worldwide, 130 more than on June 30, 2018.
