Wacker Chemie, Rhodia Latest Bolstered By Chemical Recovery

Thursday's updates from France's Rhodia SA (RHA.FR) and Germany's Wacker Chemie AG (WCH.XE) confirm that European chemicals companies had a bumper third quarter amid a global recovery and look likely to end the year strongly, despite most players trying to restrain expectations.

Most companies attributed the strong performance to the lack of a traditional summer sales slump, which usually results in a weaker third quarter figures for chemical companies.

But this year, a massive rebound in demand boosted profits, as many chemical companies were still waking up from last year's slump. Many chemical producers had cut their capacity during the crisis and thus couldn't respond to the rapid rebound in orders when demand snapped back.

On Oct. 20 BASF SE (BAS.XE) reported a 23% rise in third quarter revenue and raised its full-year guidance.

A steeper-than-expected 85% jump in third quarter earnings before interest, taxes, depreciation and amortization prompted smaller German rival Wacker Chemie AG (WCH.XE) Thursday to raise its 2010 outlook for sales and earnings. Wacker said demand from its customers stayed strong during the usually weaker summer vacation period and that growth was also supported by the U.S. dollar´s strength compared to a year earlier.

The Munich-based chemical company now anticipates consolidated sales of well over EUR4.6 billion, with Ebitda exceeding EUR1.1 billion. Wacker previously saw 2010 sales of about EUR4.5 billion and Ebitda exceeding the 2008 record level of EUR1.06 billion.

French specialty chemicals company Rhodia SA (RHA.FR) also raised its guidance for the full year after its quarterly net profit increased four fold with business buoyant across its markets and regions.

Other chemical producers who gave solid third-quarter performances included German conglomerate Bayer AG (BAYN.XE), Switzerland's Clariant AG (CLN.VX) and Dutch coatings and chemicals company Akzo Nobel NV (AKZA.AE).

Some of the companies warned that the positive developments in the recent months may not continue at the same pace next year.

But analysts say the sector should retain considerable momentum going forward.

"It's quiet obvious that this massive upward trend will lose force next year, as the recovery from last year's slump was so enormous," said Andreas Heine of UniCredit.

"However, that doesn't mean that there won't be any growth for chemical companies. The recovery will be only in the low single digits in established markets like Europe and U.S.

In emerging markets, however, growth won't probably weaken at all - so that on global level, chemical companies will see 3%-4% growth."

-By Natascha Divac, Dow Jones Newswires; +49 69 29725 500; djnews.frankfurt@dowjones.com

(Sten Stovall, Harriet Torry and Adam Mitchell contributed to this article.)

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