BorsodChem strategy 2012: From regional to European
The annual general meeting (AGM) of BorsodChem Rt (BorsodChem) approved the reports of the Board of Directors and the Supervisory Board. Approval was given to the consolidated and non-consolidated balance sheets and profit and loss accounts of BorsodChem for the 2005 fiscal year, prepared in accordance with the Hungarian and international accounting standards.
According to the IFRS consolidated and audited balance sheet the group’s net sales in 2005 totalled HUF 173.0 bn, up by 17% year on year, while EBITDA amounted to HUF 27.0 bn, an increase of 31.7%. CAPEX was HUF 51.9 bn. The approved effective dividend of HUF 51 per share implies an EPS payout ratio of 27.1%, up from last year’s 19.9%.
At the AGM CEO Kay Gugler presented BorsodChem’s new Strategy 2012, which maintains logical continuity with and relies significantly on BorsodChem’s globally unique business model and key products, which have so far resulted in great successes for the company and its shareholders. Along these lines in the past 15 years BorsodChem has transformed from a single product line local company into a Central Eastern European player with some very successful products such as TDI, MDI and PVC. Implementation of the new long-term strategy will elevate the company on to a leading European level with strong focus on isocyanates in its product portfolio.
Increasing global demand for TDI and uneven geographical spread of capacities allow BorsodChem to exploit a unique opportunity to become the number one European producer of TDI. With regards to the continued increasing demand for MDI and to harness the potential inherent in economies of scale BorsodChem will continue investing in MDI production and double its current capacity. To achieve this, a world-scale 160 ktpa TDI plant and a state-of-the-art 200 ktpa MDI plant will be built by mid 2009 and 2010-2011 respectively. The new facilities will be integral parts of the site in Kazincbarcika.
In addition to volume expansion, BorsodChem will concentrate on differentiating a considerable part of its downstream MDI and TDI in order to add extra value and provide for sufficient sustainable competitive advantage. This move forward from commodity products towards further processed specialty products, polyurethane systems and solutions will enable the company to be a price setter rather than price taker. To foster the related technological innovation and R&D BorsodChem will invest heavily in its people simultaneously with further capacity expansion projects. As regards PVC BorsodChem will maintain its PVC business for synergies within the integrated product portfolio while maximising cash generation. The capacity development programme, which will require capital expenditure of around € 500 million, will elevate BorsodChem intoEurope’s second largest isocyanates player by 2012.
Further to last year’s excellent performance, the company’s financial results for the first quarter of 2006 witness that the new long term strategy rests on a solid financial foundation. BorsodChem Group’s sales revenue increased to HUF 55.6 bn, up by 32.6% year on year. Increased sales revenues were primarily driven by high MDI, aniline and PVC product volumes, involving Petrochemia Blachownia into consolidation as well as higher TDI product prices. Despite considerably higher depreciation, operating profit exceeded HUF 6 bn, which is a remarkable achievement given prevailing market conditions. In Q1 2006 EBIT margin was over 10%. The operational cash flow (EBITDA) rose by 14.7% to HUF 9.5 bn, while EBITDA margin was 17.1%.
Budapest,28 April 2006
Further information
Miklós Hanti
BorsodChem IR
Phone +36 48/511-644