Rhodia in Line with 2006 Objectives; First Quarter 2006 Results
May 11 2006 - 8:57AM
Business Wire
Rhodia (NYSE:RHA) reported: -- Net Sales(a) up 9.4% to 1,354
million euros, compared with a particularly strong first quarter
2005 -- Recurring EBITDA margin of 13.7%; growth in recurring
EBITDA(b) up to 185 million euros from 170 million euros in the
first quarter 2005 -- Increase in Operating Profit to 81 million
euros from 75 million euros in the first quarter 2005 -- Positive
Net Income from continuing operations of 9 million euros, versus a
57 million euros loss in the first quarter 2005 -- Consolidated Net
Debt stable at 2.1 billion euros due to rigorous management of
Working Capital Requirement -0- *T Summary income statement Q1 2005
In millions of Restated Q1 2005 Q1 2006 euros before the after the
after the impact of impact of impact of discontinued discontinued
discontinued % operations operations operations Variation
------------------ ------------ ------------- -------------
---------- Net Sales(a) 1,316 1,238 1,354 +9.4% ------------------
------------ ------------- ------------- ---------- Recurring
EBITDA(b) 163 170 185 +8.8% ------------------ ------------
------------- ------------- ---------- Recurring EBITDA margin
12.4% 13.7% 13.7% - ------------------ ------------ -------------
------------- ---------- Operating Profit 58 75 81 +8.0%
------------------ ------------ ------------- -------------
---------- Income/(loss) from continuing operations - (57) 9 -
------------------ ------------ ------------- -------------
---------- Income/(loss) from discontinued operations - (17) (44) -
------------------ ------------ ------------- -------------
---------- Net Income/(loss) (74) (74) (35) - ------------------
------------ ------------- ------------- ---------- *T 1. Operating
performance in line with 2006 objectives Net Sales(a) rose 9.4% to
1,354 million euros in the first three months of 2006, from 1,238
euros million a year earlier. This increase results from a 2%
growth in volumes, a 2% rise in prices as well as a 7% positive
currency effect due to the appreciation of the dollar and the
Brazilian real against the euro. Recurring EBITDA(b) amounted to
185 million euros for the quarter, up 8.8% compared with a
particularly strong first quarter 2005. The recurring EBITDA margin
increased from 12.4% before the impact of discontinued operations
in the first quarter 2005 to 13.7% primarily reflecting the
refocusing of the business portfolio and a solid level of demand
over the quarter. The sharp increase in raw material and energy
prices compared to the first quarter 2005 was partially offset by
further price increases, for which the full impact is expected in
the second quarter 2006. -0- *T (a) Excluding other revenues (b)
Before restructuring, amortization and depreciation, other
operating income and expense, and capital gains and losses on
divestments *T Operating Profit increased by 8% to 81 million euros
from 75 million euros in the first quarter 2005. The Financial
Result was a negative 59 million euros, compared to a negative 124
million euros in the first quarter 2005 which was impacted by
non-recurring items. The reduction in consolidated debt compared to
the first quarter 2005 resulted in a decrease in interest expenses.
Net Income from continuing operations amounted to 9 million euros.
Discontinued operations generated a loss of 44 million euros,
reflecting the final impact of the divestment of the pharmaceutical
custom synthesis business and particularly the reclassification of
the translation reserve. The total Net Loss was 35 million euros,
compared to a loss of 74 million euros in the first quarter 2005.
2. Consolidated Net Debt stable at 2.1 billion euros The ratio of
Working Capital Requirement to total sales improved to 12.4% versus
15.5% in the first quarter 2005, demonstrating the Group's ability
to manage effectively the seasonal increase in Working Capital
Requirement. Capital Expenditure totaled 66 million euros in the
first quarter. Free Cash Flow(a) remained negative at 82 million
euros, from a negative 226 million euros the year before. At 2.1
billion euros, consolidated Net Debt was stable compared with
December 31, 2005. 3. A Group committed to building for the future
Divestment of the pharmaceutical custom synthesis business and the
latex operations was completed during the quarter, marking a major
new milestone in the strategic refocusing of the business
portfolio. The Group is continuing to expand in businesses in which
it holds solid leadership positions. In February 2006, Rhodia
Polyamide brought on stream a new engineering plastics facility in
Shanghai, which is now operating at full capacity. Recently, the
Group announced the construction of a polymerization unit at its
production platform in Onsan, South Korea, with start-up scheduled
for the end of 2007. 4. Outlook In an economic environment still
influenced by volatile raw material prices, energy costs and
exchange rates, market conditions remain satisfactory in the
Group's various businesses and operating regions. As a result,
Rhodia can confirm its 2006 objectives: -- A recurring EBITDA
margin of at least 13% -- A positive Net Income for 2006 -- A ratio
of Net Debt to recurring EBITDA of less than 2.9 times Looking
further ahead, the Group reaffirms its medium-term objectives: -- A
recurring EBITDA margin of at least 15%(b) -- A ratio of Net Debt
to recurring EBITDA of less than 2.2(b) times -0- *T (a) Defined as
"net cash from operating activities" minus "purchases of property,
plant and equipment" and minus "purchases of other non-current
assets" (b) Excluding CO2 credits from CDM projects. This press
release and a detailed presentation of the Q1 2006 results will be
available at www.rhodia.com as of 7:30 am *T This press release
contains elements that are not historical facts including, without
limitation, certain statements on future expectations and other
forward-looking statements. Such statements are based on
management's current views and assumptions and involve known and
unknown risks and uncertainties that could cause actual results,
performance or events to differ materially from those anticipated.
Rhodia is a global specialty chemicals company recognized for its
strong technology positions in Performance Materials, Functional
Chemicals and the Organics and Services clusters. Partnering with
major players in the automotive, electronics, pharmaceuticals,
agrochemicals, consumer care, tires, and paints and coatings
markets, Rhodia offers tailor-made solutions combining original
molecules and technologies to respond to customers' needs. Rhodia
subscribes to the principles of Sustainable Development
communicating its commitments and performance openly with
stakeholders. Rhodia generated sales of 5 billion euros in 2005 and
employs around 19,500 people worldwide. Rhodia is listed on
Euronext Paris and the New York Stock Exchange. -0- *T Results Fact
Sheet: Q1 2006 overview Income Statement
----------------------------------------------------------------------
Q1 2005 Q1 2006 Variation
----------------------------------------------------------------------
Net Sales 1,238 1,354 9.4%
----------------------------------------------------------------------
Other revenue 140 162 15.7%
----------------------------------------------------------------------
Recurring EBITDA 170 185 8.8% Recurring EBITDA Margin (a) 13.7%
13.7%
----------------------------------------------------------------------
Depreciation & Amortization (89) (93) Other Gains and Losses 0
(6) Restructuring Costs (6) (5)
----------------------------------------------------------------------
Operating Profit 75 81
----------------------------------------------------------------------
Financial Results (124) (59) Income tax (8) (13) Income/(loss) from
continuing operations (57) 9 Income/(loss) from discontinued
operations (17) (44) Net Income/(loss) (74) (35)
----------------------------------------------------------------------
Net Income/(loss) (Group Share) (72) (36)
----------------------------------------------------------------------
Minority interests (2) 1
----------------------------------------------------------------------
Net Sales Recurring EBITDA Operating Profit Q1 Q1 Q1 Q1 Q1 Q1 2005
2006 Variation 2005 2006 Variation 2005 2006 ------------ ------
------ --------- ----- ----- --------- ----- ----- RHODIA 1,238
1,354 9.4% 170 185 8.8% 75 81 POLYAMIDE 465 508 9.2% 80 65 (18.8)%
56 36 ACETOW 92 109 18.5% 23 30 30.4% 15 21 NOVECARE 228 246 7.9%
28 29 3.6% 19 21 SILCEA 195 216 10.8% 26 32 23.1% 11 15 ECO
SERVICES 48 56 16.7% 11 14 27.3% 6 7 ORGANICS 228 232 1.8% 18 17
(5.6)% 6 4 ENERGY SERVICES 2 22 (5) 17 CORPORATE & Others (18)
(13) (27.8)% (18) (24) 33.3% (33) (40) ------------ ------ ------
--------- ----- ----- --------- ----- ----- (all figures are in
million euros after discontinued operations)
----------------------------------------------------------------------
2006 Targets Mid term Targets
----------------------------------------------------------------------
Recurring EBITDA Recurring EBITDA margin(a) greater than margin(a)
greater 15%(b) than 13% Positive Net Income Net Debt / Recurring
EBITDA less than 2.2x(b) Net Debt / Recurring EBITDA less than 2.9x
----------------------------------------------------------------------
(a) Calculated as recurring EBITDA / Net Sales (b) Excluding CO2
credits from CDM projects Results Fact Sheet: Q1 2006 overview (all
figures are in million euros after discontinued operations)
----------------------------------------------------------------------
-- Q1 2005: a high comparison base with record Ebitda -- Sustained
growth in engineering plastics and nylon intermediates POLYAMIDE --
Negative price impact linked to adipic acid but recent improvement
especially in Asia -- Ongoing price rises with significant impact
expected in Q2
----------------------------------------------------------------------
-- Moderate volume growth ACETOW -- Raw material increases
compensated by higher prices and lower fixed costs
----------------------------------------------------------------------
NOVECARE -- Price increases offset rise in raw material costs --
Further fixed cost savings
----------------------------------------------------------------------
-- Good volumes in all segments SILCEA -- Favourable pricing more
than offsets raw material cost increases
----------------------------------------------------------------------
ECO -- Favorable business conditions SERVICES
----------------------------------------------------------------------
-- Portfolio restructuring delivers further significant ORGANICS
fixed cost reduction, but causes lower volumes -- Raw material
costs largely offset by price increases
----------------------------------------------------------------------
-- Until CER projects operational, focused on optimisation of
energy supply -- From 2006, electricity, gas & steam sold
internally at ENERGY market price: benefits retained in Energy
Services SERVICES
----------------------------------------------------------- --
Strong seasonal cogeneration activity in Q1 Q1 2006 2006 --
Opportunities seized to optimise energy sourcing
----------------------------------------------------------------------
Net Foreign Selling Foreign Net Sales Scope Exchange Volume Price
Exchange Sales Q1 conversion & mix transaction Q1 2005 effect
2006
----------------------------------------------------------------------
RHODIA 1238 (13) 90 27 27 (15) 1354 POLYAMIDE 465 (3) 53 29 (14)
(22) 508 ACETOW 92 0 5 3 7 2 109 NOVECARE 228 (8) 14 0 11 1 246
SILCEA 195 (6) 7 13 6 1 216 ECO SERVICES 48 0 4 (2) 6 0 56 ORGANICS
228 (2) 7 (15) 11 3 232 ENERGY SERVICES CORPORATE & Others (18)
6 0 (1) 0 0 (13)
----------------------------------------------------------------------
Recurring Foreign Volume Selling EBITDA Scope Exchange & mix
Price(a) Q1 2005 conversion
----------------------------------------------------------------------
RHODIA 170 (2) 13 18 11 POLYAMIDE 80 (3) 9 10 (34) ACETOW 23 1 1 2
9 NOVECARE 28 (3) 3 (3) 12 SILCEA 26 (1) 1 6 7 ECO SERVICES 11 1 1
0 5 ORGANICS 18 (3) 1 (9) 12 ENERGY SERVICES 2 9 0 8 0 CORPORATE
& Others (18) (3) (3) 4 0
----------------------------------------------------------------------
Recurring Recurring Raw materials Fixed Costs EBITDA EBITDA &
Energy Q1 2006 Margin(b) Q1 2006
----------------------------------------------------------------------
RHODIA (29) 4 185 13.7% POLYAMIDE 10 (7) 65 12.8% ACETOW (8) 2 30
27.5% NOVECARE (11) 3 29 11.8% SILCEA (4) (3) 32 14.8% ECO SERVICES
(2) (2) 14 25.0% ORGANICS (14) 12 17 7.3% ENERGY SERVICES 0 3 22
CORPORATE & Others 0 (4) (24)
----------------------------------------------------------------------
(a)Including FX transaction effect (b)Calculated as recurring
EBITDA / Net Sales Results Fact Sheet: Q1 2006 overview
Organisation simplification effective from January 1st 2006 2005
Enterprise results restated to reflect the simplified organisation
----------------------------------------------------------------------
Polyamide now includes the solvants business previously included in
former Coatis
----------------------------------------------------------------------
Organics now includes former Coatis and former RPS enterprises
----------------------------------------------------------------------
Energy Services was previously included in Corporate and Others
----------------------------------------------------------------------
Q1 2005 in Q2 2005 in Q3 2005 in RHODIA 2006 Enterprise 2006
Enterprise 2006 Enterprise organisation organisation organisation
(Million euros) Net Sales 1,238 1,309 1,213 Recurring EBITDA 170
165 118 % Sales(a) 13.7% 12.6% 9.7% Operating Profit 75 40 16
----------------------------------------------------------------------
----------------------------------------------------------------------
POLYAMIDE (Million euros) Net Sales 465 487 441 Recurring EBITDA 80
77 52 % Sales(a) 17.2% 15.8% 11.8% Operating Profit 56 42 23
----------------------------------------------------------------------
ACETOW (Million euros) Net Sales 92 105 104 Recurring EBITDA 23 27
27 % Sales(a) 25.0% 25.7% 26.0% Operating Profit 15 18 18
----------------------------------------------------------------------
NOVECARE (Million euros) Net Sales 228 239 226 Recurring EBITDA 28
28 20 % Sales(a) 12.3% 11.7% 8.8% Operating Profit 19 20 4
----------------------------------------------------------------------
SILCEA (Million euros) Net Sales 195 211 203 Recurring EBITDA 26 25
24 % Sales(a) 13.3% 11.8% 11.8% Operating Profit 11 4 0
----------------------------------------------------------------------
ECO SERVICES (Million euros) Net Sales 48 55 55 Recurring EBITDA 11
18 18 % Sales(a) 22.9% 32.7% 32.7% Operating Profit 6 12 13
----------------------------------------------------------------------
ORGANICS (Million euros) Net Sales 228 225 205 Recurring EBITDA 18
8 (3) % Sales(a) 7.9% 3.6% (1.5)% Operating Profit 6 (6) 3
----------------------------------------------------------------------
ENERGY SERVICES (Million euros) Recurring EBITDA 2 7 1 Operating
Profit (5) 5 1
----------------------------------------------------------------------
CORPORATE & OTHERS (Million euros) Sales & intercompany
sales eliminations (18) (13) (21) Recurring EBITDA (18) (25) (21)
Operating Profit (33) (55) (46)
----------------------------------------------------------------------
RHODIA Q4 2005 in FY 2005 in 2006 Enterprise 2006 Enterprise
organisation organisation (Million euros) Net Sales 1,325 5,085
Recurring EBITDA 142 595 % Sales(a) 10.7% 11.7% Operating Profit
-34 97
----------------------------------------------------------------------
----------------------------------------------------------------------
POLYAMIDE (Million euros) Net Sales 483 1,876 Recurring EBITDA 59
268 % Sales(a) 12.2% 14.3% Operating Profit 28 149
----------------------------------------------------------------------
ACETOW (Million euros) Net Sales 109 410 Recurring EBITDA 23 100 %
Sales(a) 21.1% 24.4% Operating Profit 14 65
----------------------------------------------------------------------
NOVECARE (Million euros) Net Sales 242 935 Recurring EBITDA 20 96 %
Sales(a) 8.3% 10.3% Operating Profit 10 53
----------------------------------------------------------------------
SILCEA (Million euros) Net Sales 201 810 Recurring EBITDA 27 102 %
Sales(a) 13.4% 12.6% Operating Profit 5 20
----------------------------------------------------------------------
ECO SERVICES (Million euros) Net Sales 51 209 Recurring EBITDA 10
57 % Sales(a) 19.6% 27.3% Operating Profit 5 36
----------------------------------------------------------------------
ORGANICS (Million euros) Net Sales 254 912 Recurring EBITDA 11 34 %
Sales(a) 4.3% 3.7% Operating Profit (26) (23)
----------------------------------------------------------------------
ENERGY SERVICES (Million euros) Recurring EBITDA 15 25 Operating
Profit 12 13
----------------------------------------------------------------------
CORPORATE & OTHERS (Million euros) Sales & intercompany
sales eliminations (15) (67) Recurring EBITDA (23) (87) Operating
Profit (82) (216)
----------------------------------------------------------------------
(a) Calculated as recurring EBITDA / Net Sales Consolidated income
statements (in millions of euros) March 31 2006 March 31 2005
---------------------------------------- --------------
-------------- Net sales 1,354 1,238
---------------------------------------- --------------
-------------- Other revenue 162 140
---------------------------------------- --------------
-------------- Cost of sales (1,254) (1,134) Administrative and
selling expenses (141) (133) Research and development expenses (29)
(31) Restructuring costs (5) (6) Goodwill impairment 0 0 Other
operating income/(expenses) (6) 0
---------------------------------------- --------------
-------------- Operating profit/(loss) 81 75 Financial income 37 33
Finance costs (97) (126) Foreign exchange gains/(losses) 1 (31)
Share of profit/(losses) of associates 0 0
---------------------------------------- --------------
-------------- Loss before income tax 22 (49) Income tax expense
(13) (8) ---------------------------------------- --------------
-------------- Loss from continuing operations 9 (57) Loss from
discontinued operations (44) (17)
---------------------------------------- --------------
-------------- Net loss (35) (74)
---------------------------------------- --------------
-------------- Attributable to: Equity holders of Rhodia SA (36)
(72) Minority interests 1 (2)
---------------------------------------- --------------
-------------- Loss per share from continuing operations (in euro)
- basic and diluted 0.01 (0.09) Weighted average number of shares
before and after dilution 1,176,716,541 627,582,158
---------------------------------------- --------------
-------------- Loss per share from discontinued operations (in
euro) - basic and diluted (0.03) (0.11) Weighted average number of
shares before and after dilution 1,176,716,541 627,582,158
---------------------------------------- --------------
-------------- Consolidated balance sheets Assets
---------------------------------------
------------------------------ (in millions of euros) March 31 2006
December 31 2005 ---------------------------------------
------------- ---------------- Property, plant & equipment
2,088 2,135 Goodwill 239 244 Other intangible assets 196 154
Investments in associates 4 4 Other non-current financial assets
162 164 Deferred tax assets 87 83
--------------------------------------- -------------
---------------- Non-current assets 2,776 2,784
--------------------------------------- -------------
---------------- Inventories 644 630 Income tax receivable 16 20
Trade and other receivables 1,193 1,188 Derivative financial
instruments 30 42 Other current financial assets 6 5 Cash and cash
equivalents 455 920 Assets classified as held for sale 16 57
--------------------------------------- -------------
---------------- Current assets 2,360 2,862
--------------------------------------- -------------
---------------- TOTAL ASSETS 5,136 5,646
--------------------------------------- -------------
---------------- Liabilities and shareholders' equity
---------------------------------------------
------------------------ (in millions of euros) March 31, December
2006 31, 2005 ---------------------------------------------
------------ ----------- Share capital 1,177 1,177 Additional
paid-in capital 570 570 Other reserves 180 141 Deficit (2,604)
(2,580) --------------------------------------------- ------------
----------- Equity attributable to equity holders of Rhodia SA
(677) (692) Minority interests 30 26
--------------------------------------------- ------------
----------- Total equity (647) (666)
--------------------------------------------- ------------
----------- Borrowings 1,971 1,975 Retirement benefits and similar
obligations 1,267 1,269 Provisions 311 297 Deferred tax liabilities
37 34 Other non-current liabilities 83 46
--------------------------------------------- ------------
----------- Non-current liabilities 3,669 3,621
--------------------------------------------- ------------
----------- Borrowings 597 1,039 Derivative financial instruments 8
14 Retirement benefits and similar obligations 70 81 Provisions 185
204 Income tax payable 32 31 Trade and other payables 1,167 1,271
Liabilities associated with assets classified as held for sale 55
51 --------------------------------------------- ------------
----------- Current liabilities 2,114 2,691
--------------------------------------------- ------------
----------- TOTAL EQUITY AND LIABILITIES 5,136 5,646
--------------------------------------------- ------------
----------- Consolidated statements of cash flows
----------------------------------------------------------------------
(in millions of euros) March 31, March 31, 2006 2005
-------------------------------------------------- ---------
--------- Net loss (Group Share) (36) (72) Adjustments for :
Depreciation, amortization and impairment of long- term assets 94
94 Net increase/(decrease) in provisions and employee benefits (22)
(15) Net increase/(decrease) in financial provisions 42 25 Share of
profit/(loss) of associates Dividends received from associates
Other income and expense (1) (6) Gain/(loss) on disposal of
non-current assets 22 (2) Income tax expense/(income) 3 (5) Foreign
exchange losses/(gains) (19) 32
-------------------------------------------------- ---------
--------- Cash flow from operating activities before changes in
working capital 83 51
-------------------------------------------------- ---------
--------- Changes in working capital - (Increase)/decrease in
inventories and work in progress (13) (41) - (Increase)/decrease in
trade and other receivables (15) (107) - Increase/(decrease) in
trade and other payables (60) (53) - Increase/(decrease) in other
current assets and liabilities (11) (18)
-------------------------------------------------- ---------
--------- Net cash from operating activities (16) (168)
-------------------------------------------------- ---------
--------- Purchases of property, plant and equipment (57) (53)
Purchases of other non-current assets (9) (5) Proceeds on disposal
of non-current assets 41 24 (Purchases of)/repayments of loans and
financial investments 2 (16)
-------------------------------------------------- ---------
--------- Net cash (used by) / from investing activities (23) (50)
-------------------------------------------------- ---------
--------- Proceeds from issue of shares, net of costs Dividends
paid New long-term borrowings, net of costs 5 704 Repayments of
non-current borrowings, net of costs (496) (522) Net
increase/(decrease) in current borrowings 62 (68)
-------------------------------------------------- ---------
--------- Net cash (used by) / from financing activities (429) 114
-------------------------------------------------- ---------
--------- Effect of foreign exchange rate changes 3 8
-------------------------------------------------- ---------
--------- Net increase/(decrease) in cash and cash equivalents
(465) (96) --------------------------------------------------
--------- --------- Cash and cash equivalents at the beginning of
the year 920 612 Cash and cash equivalents at the end of the year
455 516 --------------------------------------------------
--------- --------- *T
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