2004 Annual Results: Rhodia Meets Its Commitments; Group's Recovery Continues
PARIS--March 1, 2005--Following a meeting of its Board of Directors on February 28, Rhodia today released its audited financial results for 2004. Highlights for the year included:-- Improving operating performance, led by growth in volumes and price increases
-- 22.3% improvement in EBITDA before restructuring costs, on a constant perimeter and exchange rate basis, from 364 million euros in 2003 to 445 million euros in 2004
-- 117 million euros fixed costs savings in 2004
-- 791 million euros in net proceeds from the completed divestiture plan
-- 25% reduction in total net debt (3,240 million euros at the end of 2003 to 2,418 million euros at the end of 2004)
-- Successful implementation of the refinancing plan and extension of bond maturities
Simplified income statement
In millions of euros
2003 2003
Reported Restated* 2004
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5,453 4,946 Net sales 5,281
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435 364 EBITDA before restructuring costs 445
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8% 7.4% EBITDA margin before restructuring 8.4%
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364 294 EBITDA after restructuring costs 212
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6.7% 5.9% EBITDA margin after restructuring cost 4%
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(159) (153) Operating loss (348)
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Net loss
(1,351) - after amortization of goodwill (625)
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*Restated to account for divestitures completed in 2004 and at current
exchange rates
-- Improving operating performance, led by growth in volumes and price increases
Fourth quarter advancement
In millions of euros
4th Quarter 2003
Reported Restated* 4th Quarter 2004
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1,318 1,115 Net sales 1,233
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112 89 EBITDA before restructuring 109
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8.5% 8% EBITDA margin before restructuring 8.8%
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*Restated to account for divestitures completed in 2004 and at current
exchange rates
Net sales for the fourth quarter stood at 1,233 million euros, a 10.6% increase over the same period in 2003 on the same basis (constant structure and exchange rates). This performance reflects the strong emphasis in 2004 on raising selling prices which resulted in a 7.7% increase in prices in the fourth quarter of 2004 compared with the fourth quarter of 2003, excluding transactional exchange rate effects. Over the same period, volumes rose 4.1% compared to 2003. For the fourth quarter, EBITDA before restructuring increased 22.5% to 109 million euros, on the same basis (constant structure and exchange rates).
-- Continuous improvement in operational performance in 2004
Rhodia reported net sales of 5,281 million euros for 2004, a 3% decline from 2003 reflecting the impact of divestitures during the year (-6.3%) and currency effects (-3%). On the same basis (comparable perimeter and exchange rates), net sales rose 6.8% for the year.
Sales grew 2.7% from price increases, excluding transactional exchange rate effects (-1.2%). Higher pricing offset 70% of the increase in raw material costs for the full year and nearly 90% of the increase during the fourth quarter.
At the same time, volumes rose 5.3% over 2003 in an environment of sustained demand in most of the Group's markets, particularly in Asia, the United States and Latin America.
In 2004, the Group initiated a fixed cost reduction program that saved 117 million euros over the year.
Earnings before interest, taxes, depreciation and amortization (EBITDA) before restructuring stood at 445 million euros in 2004, a 22.3% increase over 2003 on the same basis (comparable perimeter and exchange rates), attributable mainly to fixed costs reduction. On the same basis (comparable perimeter and exchange rates), EBITDA margin before restructuring increased to 8.4% from 7.4% in 2003.
The consolidated operating loss totalled 348 million euros versus 153 million euros in 2003, on the same basis (comparable perimeter and exchange rates). It reflects amortization (410 million euros), as well as exceptional items related to 2004 restructuring provisions (163 million euros), the revaluation of environmental liabilities to 2020 (69 million euros) and depreciation of tangible assets (150 million euros).
Net financial expense (263 million euros) comprised 178 million euros in interest expense, 60 million euros in non-recurring costs related to refinancing and 25 million euros in other financial charges.
Other gains and losses stood at 259 million euros of which 232 million euros was for capital gains from divestitures.
Net loss amounted to EUR 625 million versus a loss of 1,351 million euros in 2003 and includes equity in earnings of affiliated companies of -58 million euros (Nylstar), a tax charge of 56 million euros and the exceptional amortization of goodwill (133 million euros) announced January 19. -- A 25% reduction in total net debt in 2004
Rhodia carefully manages its capital expenditures, which totaled 199 million euros in 2004 versus 233 million euros in 2003, and is continuing to improve management of its Operating Working Capital needs, which represented 12.6% of net sales at December 31, 2004 versus 13.6% a year earlier.
Operating cash flow* amounted to 43 million euros in 2004, while free cash flow was a negative 271 million euros at year-end due to restructuring costs (115 million euros) and capital expenditures over the period (199 million euros).
Consolidated net debt totalled 1,929 million euros at December 31, 2004, compared with 2,567 million euros at the end of 2003. Total net debt, including off-balance sheet items, stood at 2,418 million euros, a reduction of 25% compared with the end of 2003.
As of December 31, 2004, the Group's liquidity, including available bank facilities, exceeded 1 billion euros.
-- Rhodia met its commitments in 2004
-- Refinancing
The success of the 471 million euros rights issue, the May 2004 issue of 700 million euros in bonds and the renegotiation of a new bank facility enabled Rhodia to achieve its refinancing plan. In addition, the 500 million euros senior notes issue in February 2005 extended the maturity of the Group's bond debt to 2010.
-- Divestment program
The 2004 divestiture target was exceeded, with proceeds, net of transaction costs, of 791 million euros for the year.
-- Resizing the organization and reducing costs
In 2004, cost reduction plans generated savings of 117 million euros.
As of December 31, 2004, 61% of the two year support function reorganization plan had been completed, with the elimination of more than 800 of the 1,329 jobs identified as redundant worldwide.
At the same time, the industrial restructuring programs led by the Enterprises are proceeding in line with objectives, with dedicated action plans underway.
In France, these restructuring plans are being implemented as part of the framework agreement signed by all of the Group's unions, which is designed to harmonize the consultation process and conditions of departure offered to the people affected.
*Net cash flows from operating activities before restructuring costs, capital expenditures and the securitization program change.
-- Rhodia is dedicated to strengthening its corporate governance
The appointment of new independent directors from different backgrounds --Jerome Contamine, Francis Mer and Aldo Cardoso--has contributed to enhancing the quality of the corporate governance process. Today, the three Board committees are chaired by independent directors: Aldo Cardoso for the Audit Committee, Michel de Fabiani for the Compensation and Selection Committee and Francis Mer for the Strategic Committee.
In addition, the renewal of the senior management team has led to the appointment of Bruno Mouclier as Group Executive Vice President and Chief Financial Officer and of Jean-Pierre Labroue as Group Executive Vice President, General Counsel and Corporate Secretary.
-- Rhodia reconfigured to meet the challenge of competitiveness
Rhodia has streamlined its organization and refocused its portfolio on competitive technologies and businesses. More than 60% of 2004 sales generated an aggregate EBITDA margin above the Group's 2006 target of 13%.
Businesses having an adverse impact on margins have been identified and specific action plans are being implemented and are progressing in line with objectives.
In addition, Rhodia has continued to strengthen its positions in fast growing regions like Latin America and Asia, especially China. Activity in China increased by 29% in 2004. China accounted for 5% of the Group's consolidated sales. With nearly 3,150 employees, China today represents the Group's third largest country in terms of employees, after France and Brazil. The local manufacturing base is being strengthened, including through construction of a new engineering plastics plant in Shanghai.
During a year shaped by profound transformations, safety standards were improved across the organization in 2004 with a rate of lost-time accidents per million hours worked of 0.9, ranking Rhodia among the top five chemical companies worldwide in the area of workplace safety.
-- Outlook
The first-half 2005 economic environment is expected to be driven by sustained demand, particularly in Asia, the United States and Latin America, high raw materials prices and an unfavorable euro/dollar exchange rate. First-quarter business indicators have confirmed these trends.
Rhodia is staying the course in 2005 by continuing to implement its restructuring plan, improve its margins and control its debt.
Rhodia confirms its 2006 objectives (under French GAAP):
-- A recurring EBITDA margin of at least 13%.
-- A return to positive net income in 2006.
-- A ratio of consolidated net debt to EBITDA of less than 3.5.
This press release and a detailed presentation of the 2004 results will be available at www.rhodia.com as of 7:30 this morning.
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 applications chemistry, specialty materials & services and fine chemicals. Partnering with major players in the automotive, electronics, fibers, pharmaceuticals, agrochemicals, consumer care, tires and paints & 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 net sales of 5.3 billion euros in 2004 and employs 20,000 people worldwide. Rhodia is listed on the Paris and New York stock exchanges.
CONSOLIDATED INCOME STATEMENT
-----------------------------
(French GAAP)
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(Million Euros) Q4 2003 Q4 2004
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----------------------------------------------------------------------
Net Sales 1,318 1,233
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EBITDA before restructuring 112 109
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EBITDA 85 -17
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Operating Profit -17 -268
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Equity in earnings of affiliated companies -17 -31
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Interest expenses -141 -61
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Other gains and losses -33 8
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Income Tax 41 22
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Minority Interests -1 -2
----------------------------------------------------------------------
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Goodwill amortization -5 -137
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Net result after minorities -172 -468
(after goodwill amortization)
----------------------------------------------------------------------
----------------------------------------------------------------------
Earning/(loss) per share (euro)*
(after goodwill amortization) -0.96 -0.75
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* calculated on the base of 627 582 158 shares
CONSOLIDATED BALANCE SHEET
------------------------------------
September 04 December 04
------------------------------------
(Million Euros)
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Fixed Assets 3,467 3,110
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----------------------------------------------------------------------
Current Net Assets 399 256
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Total Assets 3,866 3,366
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----------------------------------------------------------------------
Shareholders' Equity* 590 93
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----------------------------------------------------------------------
Long Term & Short Term Liabilities 1,228 1,344
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----------------------------------------------------------------------
Net Debt 2,048 1,929
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----------------------------------------------------------------------
Total Liabilities 3,866 3,366
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* including minority interests
(Million Euros) Q4 2003 Q4 2003 Q4 2004 %
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restated
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RHODIA (consolidated) (A) (B) (B)/(A)
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Net Sales 1,318 1,115 1,233 111%
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EBITDA before restruct. 112 89 109 122%
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EBITDA margin bef. rest. % 8.5% 8.0% 8.8%
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EBITDA 85 59 -17 N/A
----------------------------------------------------------------------
---------------------------
HPCII
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Net Sales 146 134 144 107%
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EBITDA before restruct. 18 15 17 113%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 12.1% 11.5% 11.9%
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EBITDA 16 14 16 114%
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---------------------------
PPF
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Net Sales 257 85 95 112%
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EBITDA before restruct. 17 1 5 500%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 6.7% 1.2% 5.1%
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EBITDA 14 0 -9 N/A
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RE3S
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Net Sales 177 173 188 109%
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EBITDA before restruct. 18 16 19 119%
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EBITDA margin bef. rest. % 9.9% 9.4% 10.0%
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EBITDA 14 10 16 160%
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---------------------------
PPMC
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Net Sales 123 115 131 114%
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EBITDA before restruct. 11 9 14 156%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 8.5% 8.2% 10.5%
----------------------------------------------------------------------
EBITDA 9 8 -4 N/A
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POLYAMIDE
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Net Sales 348 341 421 123%
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EBITDA before restruct. 52 53 59 111%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 15.0% 15.4% 14.0%
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EBITDA 51 51 45 88%
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---------------------------
ACETOW
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Net Sales 99 97 95 98%
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EBITDA before restruct. 23 22 19 86%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 23.1% 23.1% 20.1%
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EBITDA 23 22 19 86%
----------------------------------------------------------------------
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ECO SERVICES
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Net Sales 49 45 44 98%
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EBITDA before restruct. 3 2 2 100%
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EBITDA margin bef. rest. % 5.1% 3.4% 5.5%
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EBITDA 2 1 2 200%
----------------------------------------------------------------------
---------------------------
PPA
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Net Sales 93 91 85 93%
----------------------------------------------------------------------
EBITDA before restruct. 5 5 6 120%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 5.9% 5.7% 6.8%
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EBITDA 5 5 -1 N/A
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RPS
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Net Sales 65 58 56 97%
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EBITDA before restruct. 4 3 -3 N/A
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EBITDA margin bef. rest. % 6.7% 5.9% -4.8%
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EBITDA 5 4 -7 N/A
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inter company Sales -38 -24 -26 108%
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CORPORATE & OTHERS
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EBITDA before restruct. -38 -38 -29 76%
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EBITDA -54 -56 -95 170%
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CONSOLIDATED INCOME STATEMENT
-----------------------------
(French GAAP)
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(Million Euros)
2003 2004
----------------------------------------------------------------------
----------------------------------------------------------------------
Net Sales 5,453 5,281
----------------------------------------------------------------------
----------------------------------------------------------------------
EBITDA before restructuring 435 445
----------------------------------------------------------------------
----------------------------------------------------------------------
EBITDA 364 212
----------------------------------------------------------------------
----------------------------------------------------------------------
Operating Profit -159 -348
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Equity in earnings of affiliated companies -95 -58
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Interest expenses -250 -263
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Other gains and losses -98 259
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Income Tax -142 -56
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Minority Interests -5 -9
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Goodwill amortization -602 -150
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----------------------------------------------------------------------
Net result after minorities -1,351 -625
(after goodwill amortization)
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----------------------------------------------------------------------
Earning/(loss) per share (euro) -7.53* -1.33**
(after goodwill amortization)
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* calculated on the base of 179 309 188 shares
** calculated on the base of 471 607 727 shares (average number of
shares in circulation)
CONSOLIDATED BALANCE SHEET
------------------------------
December 03 December 04
------------------------------
(Million Euros)
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Fixed Assets 3,968 3,110
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Current Net Assets 200 256
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----------------------------------------------------------------------
Total Assets 4,168 3,366
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----------------------------------------------------------------------
Shareholders' Equity* 275 93
----------------------------------------------------------------------
----------------------------------------------------------------------
Long Term & Short Term Liabilities 1,326 1,344
----------------------------------------------------------------------
----------------------------------------------------------------------
Net Debt 2,567 1,929
----------------------------------------------------------------------
----------------------------------------------------------------------
Total Liabilities 4,168 3,366
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* including minority interests
(Million Euros) 2003 2003 2004 %
----------------------------------------------------------------------
restated
---------------------------
RHODIA (consolidated) (A) (B) (B)/(A)
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Net Sales 5,453 4,946 5,281 107%
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EBITDA before restruct. 435 364 445 122%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 8.0% 7.4% 8.4%
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EBITDA 364 294 212 72%
----------------------------------------------------------------------
---------------------------
HPCII
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Net Sales 609 558 608 109%
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EBITDA before restruct. 74 65 76 117%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 12.1% 11.6% 12.5%
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EBITDA 71 62 74 119%
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---------------------------
PPF
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Net Sales 1,108 737 796 108%
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EBITDA before restruct. 92 48 72 150%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 8,3% 6,6% 9,1%
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EBITDA 75 35 55 157%
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---------------------------
RE3S
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Net Sales 721 703 748 106%
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EBITDA before restruct. 58 55 53 96%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 8.0% 7.8% 7.1%
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EBITDA 53 46 50 109%
----------------------------------------------------------------------
---------------------------
PPMC
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Net Sales 523 494 527 107%
----------------------------------------------------------------------
EBITDA before restruct. 38 34 25 74%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 7.2% 6.8% 4.8%
----------------------------------------------------------------------
EBITDA 28 24 7 29%
----------------------------------------------------------------------
---------------------------
POLYAMIDE
----------------------------------------------------------------------
Net Sales 1,373 1,347 1,559 116%
----------------------------------------------------------------------
EBITDA before restruct. 157 155 180 116%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 11.4% 11.5% 11.5%
----------------------------------------------------------------------
EBITDA 150 149 161 108%
----------------------------------------------------------------------
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ACETOW
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Net Sales 424 415 393 95%
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EBITDA before restruct. 100 98 90 92%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 23.5% 23.5% 22.9%
----------------------------------------------------------------------
EBITDA 99 97 90 93%
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ECO SERVICES
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Net Sales 213 193 201 104%
----------------------------------------------------------------------
EBITDA before restruct. 69 64 56 104%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 32.5% 33.0% 27.6%
----------------------------------------------------------------------
EBITDA 68 63 55 87%
----------------------------------------------------------------------
---------------------------
PPA
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Net Sales 366 359 343 96%
----------------------------------------------------------------------
EBITDA before restruct. 22 22 14 64%
----------------------------------------------------------------------
EBITDA margin bef. rest. % 6.0% 6.1% 4.0%
----------------------------------------------------------------------
EBITDA 22 22 -14 N/A
----------------------------------------------------------------------
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RPS
----------------------------------------------------------------------
Net Sales 260 249 236 95%
----------------------------------------------------------------------
EBITDA before restruct. -26 -27 -15 56%
----------------------------------------------------------------------
EBITDA margin bef. rest. % -9.9% -10.9% -6.5%
----------------------------------------------------------------------
EBITDA -30 -31 -35 113%
----------------------------------------------------------------------
----------------------------------------------------------------------
inter company Sales -143 -109 -130 119%
----------------------------------------------------------------------
---------------------------
CORPORATE &OTHERS
----------------------------------------------------------------------
EBITDA before restruct. -148 -150 -105 70%
----------------------------------------------------------------------
EBITDA -172 -173 -231 134%
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