BAYER POLYMERS
Start-up in a difficult environment / 3% sales growth targeted / Plant building with partners
Bayer Polymers (D-51368 Leverkusen; www.bayerpolymers.com), formed from the EUR 10.8 bn polymers division of Bayer AG (www.bayer.com), will become a separate legal entity in the fourth quarter of 2003. The fledgling company will start up in a difficult business environment marked by overcapacity and sluggish growth. Nevertheless, CEO Hagen Noerenberg is predicting annual sales growth across the portfolio of technical thermoplastics, polyurethanes and synthetic rubber to of 3% annually up to 2006, with an EBITDA margin of 19%. He added that Bayer expects “respectable” volume sales growth of 5% annually in its market segments: 6% for thermoplastics, 3.5% for polyurethanes, 3.5% for coatings raw materials and 3% for synthetic rubber. Most of the growth is expected to come from Asia.
This positive scenario assumes an overall increase in demand by 2004 and disregards possible changes in the portfolio. In the decade up to 2003, Bayer´s polymers division saw 8.5% average sales growth. However, its product base was padded through several acquisitions, including the polyether polyols activities of Lyondell (bought for USD 2.5 bn), the coatings raw materials and functional polyesters business of Sybron Chemicals (USD 325m) and the ABS assets of the former Monsanto group (USD 580m). Bayer also undertook a substantial build-up of its polycarbonate capacity.
To achieve its profit target, Bayer Polymers will continue the efficiency scheme begun last year, calling for cost savings of EUR 200m in 2003 and EUR 700m per year from 2005. Across the company, 5,300 jobs (out of 23,000) are being eliminated, based on 2002 levels, and the number of production sites is being reduced. Bayer Polymers will spend some EUR 500m on research and development annually and EUR 600m on new production facilities, with the production complex at Caojing, China, receiving a major share of investment.
Given the current state of polymers markets, Noerenberg predicted that selective cooperation will become the industry´s watchword. Alongside smaller acquisitions to round out its forward-integrated portfolio in PU systems and PC sheet, Bayer Polymers will pursue new large-scale projects increasingly with partners. The PBT plant being built in Germany in cooperation with DuPont could be a model. The CEO confirmed that advanced talks are in progress with at least one potential partner. Among other things, Bayer may share future investment in PU raw materials in China with another global player. These could include Dow Chemical, Huntsman and BASF, whereby insiders see Dow as the front runner. Downstream, the new company also plans to continue Bayer´s co-branding strategy.
This positive scenario assumes an overall increase in demand by 2004 and disregards possible changes in the portfolio. In the decade up to 2003, Bayer´s polymers division saw 8.5% average sales growth. However, its product base was padded through several acquisitions, including the polyether polyols activities of Lyondell (bought for USD 2.5 bn), the coatings raw materials and functional polyesters business of Sybron Chemicals (USD 325m) and the ABS assets of the former Monsanto group (USD 580m). Bayer also undertook a substantial build-up of its polycarbonate capacity.
To achieve its profit target, Bayer Polymers will continue the efficiency scheme begun last year, calling for cost savings of EUR 200m in 2003 and EUR 700m per year from 2005. Across the company, 5,300 jobs (out of 23,000) are being eliminated, based on 2002 levels, and the number of production sites is being reduced. Bayer Polymers will spend some EUR 500m on research and development annually and EUR 600m on new production facilities, with the production complex at Caojing, China, receiving a major share of investment.
Given the current state of polymers markets, Noerenberg predicted that selective cooperation will become the industry´s watchword. Alongside smaller acquisitions to round out its forward-integrated portfolio in PU systems and PC sheet, Bayer Polymers will pursue new large-scale projects increasingly with partners. The PBT plant being built in Germany in cooperation with DuPont could be a model. The CEO confirmed that advanced talks are in progress with at least one potential partner. Among other things, Bayer may share future investment in PU raw materials in China with another global player. These could include Dow Chemical, Huntsman and BASF, whereby insiders see Dow as the front runner. Downstream, the new company also plans to continue Bayer´s co-branding strategy.
22.05.2003 Plasteurope.com [14628]
Published on 22.05.2003