Ciba restructures and fine tunes focus

By Simon Pitman

- Last updated on GMT

Related tags Personal care Cost Ciba

Having revealed mixed first half results, Swiss specialty chemicals
player Ciba has announced an investment programme that promises
increased expenditure on technologies to develop chemicals that
will focus on nanotechnology, alongside plans to make significant
job cuts.

The company said that it had experienced a growth in sales of 9 per cent in Swiss Francs during the first half of 2006, at CHF3.28bn (€2.07bn). However, net income came in at a loss of CHF202m, compared to a profit of CHF146m in the first half of 2005.

Chief Operating Officer Brendan Cummins said: "Performance in the secondquarter 2006 was encouraging. New innovative products supported ourperformance. Demand accelerated across nearly all of our businesses and our focus on cost management and net working capital led to increased profitability and a substantially improved free cash flow."

However, the demands placed by high utility, social and material costs mean that the company is aiming to cut its cost structure by approximately CHF 400 - 500 by 2009, which will ultimately lead to job cuts.

Cummins estimates that this mean the loss of around 2,500 staff within the company's operations in the course of the next three years.

Ciba says that this year's first half loss was expected, attributable the divestment of its loss-making Textile Effects business, a factor that also helped to boost the company's cash flow significantly.

Company CEO Armin Meyer says that the divestment of the textile business now gives it the opportunity to focus its business in three key areas - plastic additives, coatings and water and paper treatment.

One of the numberous industries that the company serves is the personal care sector. A significant proportion of its business concerns anti-microbials, UV-absorbers, reohology, modifiers, polymers, hair colours, moisturizers and delivery systems.

Stressing the importance of its personal care business operations, the company last month announced the launch of new company internet pages devoted to the specific area of colourants and stabilizers, aimed at faster navigation and easier referencing.

Likewise the company has also announced a continued focus on research and development and new technologies. With innovation leading the way in the personal care world, many of the resulting new innovations, particularly the new focus on nanotechnology, are expected to have wide-ranging implications on the company's personal care portfolio.

Looking ahead, the company believes that a combination of both this investment in technology and the renewed focus of the business is expected to boost sales by 3 - 4 per cent in local currency a year in 2007 and 2008.

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