HÜLS GROUP
PVC spinoff "the right decision" / Break-even point to be reached in 1995
The decision to spin off PVC manufacturing activities into a new limited company, Vestolit GmbH, which started business on 1 January, was "the right one," Erhard Mayer-Galow, chairman of the Hüls group (D-47564 Marl), said in a talk with iournalists in late December. With 300,000 t/y of modern suspension process capacity, around DM 450m in sales and half the workforce the Hüls division had previously, the firm headed by Robert Bornhofen and Dr Günter Mienkina as managing directors is expected to break even in 1995, if not make a profit.
A major advantage Vestolit will have over some of its competitors, said Mayer-Galow, pointing to Vinnolit GmbH, the Hoechst-Wacker jv, as an example, is the inclusion of the "entire chlorine train." In addition to administration, marketing, customer service, product development and R&D, Vestolit will absorb a number of former Hüls production lines, including chlorine electrolysis, VCM, ethylene chloride; methylene chloride, hydrochloric acid and polymer output, as well as process technology.
In forecasting a turnaround for the Hüls PVC business in 1995, Mayer-Galow said he expects the price spiral to continue upward. After rises of 10-15% in recent months, another 20% rise is projected for 1995. Not primarily the poor market for PVC, but "internal production problems," in particular the cost structure, are blamed for the Marl group's weak performance in 1994, when PVC was its "biggest problem area."
While Hüls is not yet satisfied with the return on its capital, a "shadow balance sheet" compiled for the new PVC company is "positive," based on the current price constellation, said Mayer-Galow. The business could be more profitable if Hüls were to exploit the tight market and push through more radical price hikes, he remarked, while adding that, in view of converters' difficulties in passing on polymer price increases, "we cannot put our customers under additional pressure."
Despite the present lively market, Mayer-Galow warned European PVC producers against expansion, saying "the crisis is by no means over." Hüls is no longer looking for a partner for its PVC business, but the chairman said sister firm Veba Oel hopes to bring the polyolefin activities acquired from Hüls into a jv.
A major advantage Vestolit will have over some of its competitors, said Mayer-Galow, pointing to Vinnolit GmbH, the Hoechst-Wacker jv, as an example, is the inclusion of the "entire chlorine train." In addition to administration, marketing, customer service, product development and R&D, Vestolit will absorb a number of former Hüls production lines, including chlorine electrolysis, VCM, ethylene chloride; methylene chloride, hydrochloric acid and polymer output, as well as process technology.
In forecasting a turnaround for the Hüls PVC business in 1995, Mayer-Galow said he expects the price spiral to continue upward. After rises of 10-15% in recent months, another 20% rise is projected for 1995. Not primarily the poor market for PVC, but "internal production problems," in particular the cost structure, are blamed for the Marl group's weak performance in 1994, when PVC was its "biggest problem area."
While Hüls is not yet satisfied with the return on its capital, a "shadow balance sheet" compiled for the new PVC company is "positive," based on the current price constellation, said Mayer-Galow. The business could be more profitable if Hüls were to exploit the tight market and push through more radical price hikes, he remarked, while adding that, in view of converters' difficulties in passing on polymer price increases, "we cannot put our customers under additional pressure."
Despite the present lively market, Mayer-Galow warned European PVC producers against expansion, saying "the crisis is by no means over." Hüls is no longer looking for a partner for its PVC business, but the chairman said sister firm Veba Oel hopes to bring the polyolefin activities acquired from Hüls into a jv.
31.01.1995 Plasteurope.com [20967]
Published on 31.01.1995