Ciba Specialty Chemicals Prepares for the Future.Business Editors BASEL, Switzerland--(BUSINESS WIRE)--Feb. 21, 2001 Ciba Specialty Chemicals “Ciba” redirects here. For the pre-1971 company, see Novartis. Ciba Specialty Chemicals is a chemical company based in and near Basel, Switzerland. It was formed as the non-pharmaceuticals elements of Novartis were spun out in 1997, following the merger in the (NYSE NYSE See: New York Stock Exchange : CSB CSB Kashubian (SIL code, Poland) CSB Chemical Safety and Hazard Investigation Board CSB Chemical Safety Board (Washington, DC) CSB Community Services Board CSB Computational Systems Bioinformatics ): - Good sales growth and excellent results in 2000 - Very good cash-flow development and enhanced financial position - Increase in sales and profit expected in 2001 - Simplified structure to drive sustainable profitable growth Ciba Specialty Chemicals announced today a very positive overall year in 2000 which has greatly enhanced the strength of its financial position. A combination of further sales growth and a concerted effort to achieve efficient processes led to a 39 percent increase in net income to CHF CHF In currencies, this is the abbreviation for the Swiss Franc. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 452 million resulting in an earnings per share of CHF 6.81. Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the improved by 76 percent, to CHF 418 million. With a simplified structure and a new Executive Committee, Ciba will increase its offerings of solutions and boost innovation and thus provide for profitable future growth. The existing divisional structure will be dissolved dis·solve v. dis·solved, dis·solv·ing, dis·solves v.tr. 1. To cause to pass into solution: dissolve salt in water. 2. and the nine Business Units will be grouped into five, strong, industry-focused Segments. Non-operational core support functions will be provided through centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services on a global scale. Thus, the Segments will be free to focus entirely on their markets. The Executive Committee, under the leadership of Armin Meyer, will be formed by the five Segment Heads, the CFO See Chief Financial Officer. , the Head of International Coordination and Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. and the Chief Technology Officer, who has been newly-appointed at the Executive Committee level to support the strengthened focus of the Company on innovation. Strong performance in 2000 Sales from continuing operations in 2000 totaled CHF 7.902 billion, an increase of 9 percent in Swiss francs Noun 1. Swiss franc - the basic unit of money in Switzerland franc - the basic monetary unit in many countries; equal to 100 centimes centime - a fractional monetary unit of several countries: France and Algeria and Belgium and Burkina Faso and Burundi and and 2 percent in local currencies. Sales rose over 1999 despite a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in the U.S. economy towards the end of the year. With 37 percent of sales coming from Europe (where sales increased 3% in Swiss francs), 37 percent from the Western Hemisphere Western Hemisphere Part of Earth comprising North and South America and the surrounding waters. Longitudes 20° W and 160° E are often considered its boundaries. (+12%) and 26 percent from the Eastern Hemisphere Eastern Hemisphere Part of the Earth east of the Atlantic Ocean. It includes Europe, Asia, Australia, and Africa. Longitudes 20° W and 160° E are often considered its boundaries. (+14%), we continue to maintain a well-balanced global presence and a solid geographical diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. . Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. rose 39 percent, to CHF 876 million. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (1) rose 24 percent to total CHF 1.348 billion, or 17.1 percent of sales. Net income totaled CHF 452 million, a 39 percent increase. Income from continuing operations reached CHF 418 million, 76 percent higher than in 1999. We had a very strong increase in free cash flow, which totaled CHF 2.169 billion thanks largely to our strong operational results as well as the divestment divestment to strip one's investment from an entity. of non-strategic businesses such as the Performance Polymers business and the majority of our investment in Hexcel. We used a substantial portion of this cash to reduce net debt by CHF 2 billion, or 40 percent, reducing our net debt-to-equity ratio debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. from 1.37 to 0.79. "Our results provide a strong basis for quickly further improving our presence in the market," said Armin Meyer, Chairman and Chief Executive Officer of Ciba Specialty Chemicals. "We strengthened our portfolio by successfully divesting the Performance Polymers business and by making smaller strategic acquisitions to complement existing product lines. Ciba is entering 2001 from a position of strength, and ready to strongly improve growth." The Board of Directors is proposing a dividend of CHF 2.00 per registered share of Ciba Specialty Chemicals Holding Inc. The proposal will be put before shareholders at the Annual General Meeting in Basel, Switzerland on March 23, 2001. Outlook for 2001: Fit for Growth The Company sees further sales and profit growth in 2001. Sales growth should clearly be above the average market growth in Ciba's industries. Market growth is expected to be around 2 percent, reflecting the softer macro-economic environment. EBITDA should grow both in absolute terms (Alg.) such as are known, or which do not contain the unknown quantity. See also: Absolute and as a percentage of sales. The EBITDA margin target for the year is 17.1 percent to 17.6 percent of sales. Also, due to the Company's strengthened financial position an over-proportional increase in net income and earnings per share is expected. These forecasts are based on a moderately softer macro-economic environment coupled with a modest appreciation of the Swiss franc vis-a-vis the Euro and the U.S. dollar. In the next three to four years, we have an average sales growth target of greater than 6 percent. Additional mid-term targets, as well as strategies for our new segments, will be communicated with our half-year results. Simplified Structure Lays Groundwork for Future Profitable Growth "My focus," Meyer continued, "will be to make our operations faster and more flexible, to increase our focus on customers and markets in order to drive profitable growth and to maximize value for our shareholders in the process." To implement these goals, Meyer today announced a simplified organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. . The existing nine Business Units will be grouped into five Segments and the divisional level will be dissolved. "With this change we are creating Segments which, based on their individual market penetrations Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" and volumes, are strong enough to maintain or attain market leadership in their respective markets," Meyer said. The five new Segments are: - Plastic Additives, comprised of the Business Units Polymer Additives and Process and Lubricant Lubricant A gas, liquid, or solid used to prevent contact of parts in relative motion, and thereby reduce friction and wear. In many machines, cooling by the lubricant is equally important. Additives, headed by Felix Meyer; - Coating Effects, including the Imaging and Coating Additives and Colors for Inks, Paints and Plastics Business Units, headed by Hermann Angerer; - Water and Paper Treatment, a combination of the Paper Chemicals and Water Treatments Business Units, headed by Mark Garrett; - Textile Effects, which joins the Colors for Textiles and Textile Chemicals Business Units, headed by Christoph Biedermann; and - Home and Personal Care, which will remain focused on the same industry and be adapted according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the new organization, headed by Tim Schlange. Each Segment will be totally focused on its market and has the same mission: to provide the best and most complete service to its specific customer industry. Therefore, the Segments are responsible for marketing, research and development, technology, production and sales while non-core support functions will be provided by centralized service units on a global basis. This simplified structure takes effect March 1, 2001. The new Executive Committee is comprised of: Armin Meyer (52), Chief Executive Officer; Michael Jacobi (48), Chief Financial Officer; Felix Meyer (48), Head of Plastic Additives; Hermann Angerer (54), Head of Coating Effects; Mark Garrett (39), Head of Water and Paper Treatment; Christoph Biedermann(2) (44), Head of Textile Effects; Tim Schlange (38), Head of Home and Personal Care; Franz Gerny (62), Head of International Coordination and Human Resources; and Martin Riediker (49), Chief Technology Officer.(3) Former Executive Committee member and President of the Additives division, Reinhard Neubeck will leave the Executive Committee and assume new responsibilities as a Senior Corporate Officer, lending his expertise in several areas while former Executive Committee member and President of the Colors division Jean-Luc Schwitzguebel, through mutual agreement, is leaving the Company. Divisional Results Additives Sales in our Additives division, excluding the Water Treatments business, were CHF 2.644 billion, 9 percent higher in Swiss francs and 2 percent higher in local currencies. Strong, double-digit growth was seen in Swiss francs in Asia and most parts of the Western Hemisphere. European sales gains were more moderate. Operating income rose 18 percent to total CHF 483 million and EBITDA, which also rose 18 percent, reached 23.7 percent of sales. Water Treatments Sales for the Water Treatments business unit reached CHF 1.096 billion. That was 8 percent higher in Swiss francs. Sales in local currencies increased 1 percent due in large part to the negative currency effect of the strong British pound. Operating income grew 56 percent, to CHF 78 million. EBITDA was 19 percent higher, at 12.4 percent of sales. Colors Our Colors division achieved sales of CHF 2.620 billion in 2000, 9 percent higher in Swiss francs and 3 percent higher in local currencies. In Swiss francs, strong double-digit growth occurred in Asia and most parts of the Western Hemisphere. Sales increases in Europe were more moderate. Operating income rose 39 percent to total CHF 321 million and EBITDA rose by 27 percent to reach 17.2 percent of sales. Consumer Care Sales of the Consumer Care division increased by 10 percent in Swiss francs in 2000, reaching CHF 1.542 billion. In local currencies, sales were 4 percent higher. We saw an exceptionally strong performance in the developing markets of Asia and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , with double-digit growth in Swiss francs and local currencies recorded in each. In Swiss francs, double-digit sales were also recorded throughout the entire Western Hemisphere. European sales gains were more mixed. Operating income rose 26 percent to CHF 184 million and EBITDA rose 18 percent reaching 15.5 percent of sales. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Forward-looking statements and information contained in the Annual Report and the Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations are qualified in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. as there are certain important factors that could cause results to differ materially from those anticipated. Such statements reflect the current views of the Company with respect to market conditions and future events and are subject to certain risks, uncertainties and assumptions. Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed above, among the factors that could cause actual results to differ materially are the following: the timing and strength of new product offerings, pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. of competitors, introduction of competing products by other companies, lack of acceptance of new products and services by the Company's targeted customers, changes in the Company's business strategy, the Company's ability to continue to receive adequate raw materials from its suppliers on acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs, and changes in the political and regulatory framework in which the Company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis and various other factors, both referenced and not referenced in this document. The Company does not intend or assume any obligation to update these forward-looking statements. Ciba Specialty Chemicals (SWX SWX Swiss Exchange (trademark of SWX Swiss Exchange) SWX SolidWorks (3D solid modeling CAD software) SWX Splitter / Wave Division Multiplexer :CIBN, NYSE: CSB) is a leading company dedicated to producing high-value effects for its customers' products. Our specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. , added in small quantities, enhance the performance, look and feel of the final product. Business success is driven by our long-term strategy of innovation and continuous operational improvements. Ciba brings new and creative thought to the processes and products of our customers in more than 120 countries. Ciba's continuing operations generated sales of CHF 7.9 billion in 2000 and CHF 293 million was spent on R&D to foster innovation across the Company. Virtual media kit for full year results: http://www.cibasc.com/media - News releases in full - Media presentation (available from 10:00 CET CET abbr. Central European Time CET Central European Time CET n abbr (= Central European Time) → hora de Europa central CET abbr onwards on·ward adj. Moving or tending forward. adv. also on·wards In a direction or toward a position that is ahead in space or time; forward. Adv. 1. ) - Annual Report 2000 (PDF (Portable Document Format) The de facto standard for document publishing from Adobe. On the Web, there are countless brochures, data sheets, white papers and technical manuals in the PDF format. ) - Graphs: Executive Committee, Segment structure - Photos and CVs of EC members - Photos Ciba Specialty Chemicals Editors' Note: - Full Year 2000 Results News Conference; 10:00 a.m., UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System Conference Center in Zurich - Analysts Conference; 13:30, UBS Conference Center in Zurich - Annual General Meeting; March 23, 2001, in Basel, Switzerland -------------- (1) EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortization (2) Starting date to be determined. (3) Further information, including graphs of the new structure and of the new Executive Committee, can be found in a separate news release also dated February 21, 2001.
Summary of Financial Information
(in millions of Swiss francs, except per share data)
Year ended December 31, 2000 1999
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Statements of Income
Net sales (1) 7 902 7 244 +9%
Cost of goods sold 5 333 4 956
Gross Profit 2 569 2 288
Selling, general and
administrative 1 425 1 341
Research and development 293 256
Amortization of goodwill 86 74
(Income) from earnings
of equity affiliates (113) (15)
Restructuring and
special charges 2 0
Operating Income (1) 876 632 +39%
Interest expense (265) (295)
Interest income 56 30
Other financial expense, net (14) (5)
Minority interest (7) (7)
Income from continuing
operations before income taxes 646 355
Provision for income taxes 228 117
Income from continuing operations 418 238 +76%
Income from discontinued
operations, net of tax (2) 0 87
Gain on sale of discontinued
operations, net of tax (2) 34 0
Net income 452 325 +39%
Earnings per share 6.81 4.89
Earnings per share
from continuing operations 6.31 3.58
Balance Sheets
Current assets 4 797 4 272
Property, plant and
equipment, net 3 787 3 914
Other long-term assets 3 521 4 221
Total assets 12 105 12 407
Current liabilities 2 402 2 611
Long-term liabilities 5 949 6 158
Shareholders' equity 3 754 3 638
Total liabilities and
shareholders' equity 12 105 12 407
Statements of cash flows
Net cash provided by
operating activities 1 031 1 080
Net cash provided by
(used in) investing
activities 1 271 (131)
Net cash provided by
(used in) financing
activities (1 508) (765)
Net increase in cash
and cash equivalents 766 207
Free cash flow from
continuing operations 2 172 678
(1) From continuing operations
(2) On May 31, 2000, the Company completed the sale of its Performance
Polymers business to Morgan Grenfell Private Equity
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