March 5th, 2010
German VCI sees limited growth in 2010
German VCI sees limited growth in 2010: Reuters 05.03.10
* Capacity utilisation seen stagnating at about 78 pct
* VCI sees 2010 sector revenue rebounding 6.0 pct
* Q4 industry sales down 0.3 pct yr-on-yr, up 4.2 pct vs Q3
* Asia, Latin America provide stimulus but Europe sluggish
FRANKFURT, March 4 (Reuters) - German chemicals trade group VCI said the increase in capacity utilisation in the industry, a key measure of recovery, has tapered off amid a sluggish upturn in Europe. "We don't expect a considerable recovery in 2010. That's why we won't see much change in terms of capacity utilisation," said the group's managing director Utz Tillmann late on Wednesday. "Growth rates in Asia and Latin America will not compensate for what is lacking in European demand," he added.
Germany's chemical makers, which represent the country's fourth-largest industrial sector, are currently using about 78 percent of their equipment and plants, little changed from about 77 percent in December, and below historic averages of 82-85 percent. VCI, which represents businesses in Europe's largest chemical producing country,reiterated an outlook for sector revenue to gain 6 percent in 2010 and for output volumes to rise 5 percent German chemical businesses saw sales decline 0.3 percent year-on-year in the fourth quarter but revenues rise 4.2 percent compared with the third quarter, VCI said.
The capital-intensive chemical sector was hit hard by the downturn in industries such as electronics companies, carmakers and builders. Higher capacity use is key to return to profit growth. VCI's cautious outlook reflects mixed signals from recent macro-economic surveys and company reports. Germany's economic recovery stalled in the fourth quarter of 2009, as weak consumption and a liquidation of inventories offset firmer exports, leaving Europe's largest economy on a weak footing going into 2010. German exports rose by 3 percent on the month in December, pushing foreign demand above the year-ago level for the first time in 14 months and easing concerns about economic recovery.
German's BASF, the world's largest chemical maker, predicted significant profit gains this year, but said the recovery remained shaky. Smaller peer Lanxess said it was on track to report higher 2009 core underlying earnings than previously forecast on stronger demand in Asia for tyre rubber.
(Reporting by Ludwig Burger and Andreas Kroener)