Ems-Chemie makes up for weak demand with new business
Published: Friday, Jul 12th 2024, 14:50
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The specialty chemicals group Ems posted a lower turnover in the first half of 2024, but earned slightly more. The automotive industry supplier continues to focus on China and the expansion of new business.
The Group's sales fell by 8.1 percent to 1.09 billion Swiss francs from January to June. Currency effects alone depressed sales by 4.7 percent, company boss Magdalena Martullo-Blocher emphasized to the media on Friday.
This was compounded by lower sales prices at Ems. "We had to pass on the reduction in raw material costs to customers via lower sales prices," said the Ems boss. However, the volumes sold increased.
Next dip ahead for VW and Co.
The SVP National Councillor painted a gloomy picture of the economic environment - especially for Europe. The current geopolitical conflicts are unsettling consumers and companies and the lower purchasing power is dampening consumer sentiment.
Car manufacturers are a very important customer base for Ems - they contribute around 6 out of every 10 francs of turnover. And at VW, BMW and Co., 0.2 percent more cars rolled off the production line in the first half of the year. But appearances are deceptive.
"May and June were very weak months again after a positive start to the year," said Martullo. And in Europe, it is becoming apparent that car manufacturers are already planning "extensive" plant closures again in the summer due to underutilized capacities.
Successful sales efforts
The company is countering this with an even stronger focus on the USA and China in particular; Ems had already started to strengthen the corresponding sales teams a year ago. And apparently with success: "We have more than compensated for the lower demand due to the economic situation with new business, emphasized Martullo with regard to the higher sales volumes.
There is a lot of potential for further business, especially with the 140 manufacturers of electric cars in China, said Martullo. However, Ems has not only generated new business with car manufacturers - the company is also on board with the "fat injection device", for example. "Our plastic is used in Ypsomed's auto-injector," she revealed.
And new business at Ems is very profitable. Together with the higher volumes, they drove earnings before interest and taxes (EBIT) up by 4.0% to CHF 291 million. The corresponding margin rose by 3.2 percentage points to 26.8 percent.
Guidance adjusted and share in sell-off
Ems had to lower its sales forecast slightly for the 2024 financial year as a whole due to the factors mentioned above: instead of stable sales compared to the previous year, sales are now expected to be slightly lower. The operating result, on the other hand, is expected to be slightly higher than the previous forecast.
On the stock market, investors are selling, even though the decline in sales was foreseeable in view of the negative news from other automotive suppliers, according to analysts. The shares, which have performed relatively well so far this year, are down a good 3 percent in the afternoon compared to the previous day.
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