DYNAMIT NOBEL
Earnings on plastics below group average as declining demand pressures business
Financial year 1993-94, which ended on 30 September, was one of the "most difficult" in the often turbulent history of Dynamit Nobel (DN, PO Box 1261, D-53839 Troisdorf), but Chairman Dr Axel Homburg said his group weathered the economic storms and the crisis surrounding its parent company Metallgesellschaft AG, Frankfurt, relatively well. Overall earnings shot up 20% to DM 76m and the return on sales improved to 3.1% from 2.6 % in 1992-93. Turnover declined 1.8% to DM 2.47 bn, due partly to weak prices. German sales totalled DM 1.08bn, foreign sales accounted for DM 1.39 bn.
The positive trend effects of an internal cost-cutting scheme underpinned the overall performance, but Homburg said DN's plastics business was not on the sunny side of sales or profits. The plastics division, which incorporates the Troisdorf group's processing activities, reported a decline in sales of 10% to DM 620m, including a DM 135m contribution by Menzolit GmbH (Postf. 1240, D-76703 Kraichtal-Menzingen), a market leader in the field of reinforced plastics products and SMC. This compares with a rise of 18% in 1992-93 to DM 690m. Production and volume sales also declined.
Alongside the recession in France and Germany, Dynamit's business ran into a number of other snags during the financial year just ended. Delays in the launch of new car models for which it will supply moulded parts and a downturn in production of commercial vehicles which use the group's glass fibre-reinforced composites also pressured sales and earnings. Strong competition for automobile industry orders and customer-dictated material changes, coupled with lower demand from customers in the electrical industry, communications technology, fine mechanics and medical technology – to mention a few of the fields in which the plastics division is active – also had a negative influence. Exports to Italy and UK suffered from unfavourable exchange rates.
DN's Spanish arm, Dynamit Nobel Iberica SA (E-08740 Barcelona) and Menzolit's Turkish subsidiary stood out positively from the rest of the plastics processing group. Calculated in pesetas, the Spanish company posted a 25% gain in sales of moulded parts. Despite brisk activity on the Iberian peninsula, Dynamit has no further expansion plans in the region. A stake taken in two Portuguese plastics converters in 1993 is tied to the supply of parts for the VW/Ford van set to be produced in Portugal in 1995, said Homburg.
To help speed a return to profit margins of the past in plastics and in other sagging business segments, Dynamit Nobel plans to continue its massive cost-cutting scheme which was initiated during business year 1992-93 and began to bear fruit in 1993-94. After reducing staffing by 1,070 in 1992-93, another 576 jobs were eliminated in 93-94 and Homburg said personnel cutbacks can be expected to proceed at about the same margin during the current financial year, which began on 1 October. Capital spending was reduced to DM 123m in 1993-94 from DM 151m in 1992-93.
After considerable sums spent in previous years on expanding production capacities for moulded parts, the accent last year was on improving profit, quality and environmental protection, said the DN chairman. While stressing that, as regards moulded parts, "the expansion phase is behind us," he emphasised that the group will take advantage of opportunities to invest in future-oriented projects if they occur.
For the immediate future, one of the Trosidorf group's goals is to carve out niches for itself in new markets, for leisure articles or large volume packaging materials, to mention two examples. This would provide a counterweight to its relative dependence on the automobile industry, which currently represents nearly 30% of overall business.
DN also will seek to cement its position as a supplier of applied technology and logistics; this in the past has given the group an edge over the competition in winning contracts in particular from the automobile industry. It already has started up system assembly facilities in Heilbronn, Germany to supply "just in time" bumpers for the new Audi 6. This segment of DN's business is flourishing, management hints.
READER SERVICE: Text of press conference speech by Dr Homburg (German): PIE-No. 36946.
The positive trend effects of an internal cost-cutting scheme underpinned the overall performance, but Homburg said DN's plastics business was not on the sunny side of sales or profits. The plastics division, which incorporates the Troisdorf group's processing activities, reported a decline in sales of 10% to DM 620m, including a DM 135m contribution by Menzolit GmbH (Postf. 1240, D-76703 Kraichtal-Menzingen), a market leader in the field of reinforced plastics products and SMC. This compares with a rise of 18% in 1992-93 to DM 690m. Production and volume sales also declined.
Alongside the recession in France and Germany, Dynamit's business ran into a number of other snags during the financial year just ended. Delays in the launch of new car models for which it will supply moulded parts and a downturn in production of commercial vehicles which use the group's glass fibre-reinforced composites also pressured sales and earnings. Strong competition for automobile industry orders and customer-dictated material changes, coupled with lower demand from customers in the electrical industry, communications technology, fine mechanics and medical technology – to mention a few of the fields in which the plastics division is active – also had a negative influence. Exports to Italy and UK suffered from unfavourable exchange rates.
DN's Spanish arm, Dynamit Nobel Iberica SA (E-08740 Barcelona) and Menzolit's Turkish subsidiary stood out positively from the rest of the plastics processing group. Calculated in pesetas, the Spanish company posted a 25% gain in sales of moulded parts. Despite brisk activity on the Iberian peninsula, Dynamit has no further expansion plans in the region. A stake taken in two Portuguese plastics converters in 1993 is tied to the supply of parts for the VW/Ford van set to be produced in Portugal in 1995, said Homburg.
To help speed a return to profit margins of the past in plastics and in other sagging business segments, Dynamit Nobel plans to continue its massive cost-cutting scheme which was initiated during business year 1992-93 and began to bear fruit in 1993-94. After reducing staffing by 1,070 in 1992-93, another 576 jobs were eliminated in 93-94 and Homburg said personnel cutbacks can be expected to proceed at about the same margin during the current financial year, which began on 1 October. Capital spending was reduced to DM 123m in 1993-94 from DM 151m in 1992-93.
After considerable sums spent in previous years on expanding production capacities for moulded parts, the accent last year was on improving profit, quality and environmental protection, said the DN chairman. While stressing that, as regards moulded parts, "the expansion phase is behind us," he emphasised that the group will take advantage of opportunities to invest in future-oriented projects if they occur.
For the immediate future, one of the Trosidorf group's goals is to carve out niches for itself in new markets, for leisure articles or large volume packaging materials, to mention two examples. This would provide a counterweight to its relative dependence on the automobile industry, which currently represents nearly 30% of overall business.
DN also will seek to cement its position as a supplier of applied technology and logistics; this in the past has given the group an edge over the competition in winning contracts in particular from the automobile industry. It already has started up system assembly facilities in Heilbronn, Germany to supply "just in time" bumpers for the new Audi 6. This segment of DN's business is flourishing, management hints.
READER SERVICE: Text of press conference speech by Dr Homburg (German): PIE-No. 36946.
15.11.1994 Plasteurope.com [21102]
Published on 15.11.1994