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Tessenderlo swings to loss on fertilizer demand drop

February 17/2012

(reuters) -- Belgian chemicals and plastics group Tessenderlo swung to an unexpected fourth-quarter net loss due to a sharp drop in demand for fertilizers in recession-hit southern Europe and tight raw material supplies at its gelatin unit.

Its shares fell as much as 8.8 percent on Thursday, making them the weakest performers on the Euronext Brussels Midcap Index.

Tessenderlo said it had experienced a sharp decline in demand for potassium sulfate fertilizers in the Mediterranean region and that margins came under pressure due to higher raw material costs.

That offset a rise in profit at its Kerley unit which makes chemicals for the agriculture and mining industries.

Economic output data on Wednesday highlighted the gap between the wealthy nations of northern Europe and those of the poorer south which includes countries such as Greece and Italy at the heart of the region's debt crisis.

The Gelatin and Akiolis unit, whose main customers are the food and pharmaceuticals industries, posted lower sales due to tighter raw materials availability.

The group net loss was 8.6 million euros (USD11.2 million) compared with a forecast net profit of 1.43 million in a Reuters poll of analysts.

Tessenderlo said it was cautious about 2012, which would be a year of transition.

Recurring operating profit for the fourth quarter was 1 million euros (USD1.31 million), below the 7.28 million expected in the Reuters poll of four analysts.

It was also below an earlier outlook, when the group forecast fourth-quarter operating results in line with the same period last year, which would have been EUR4.4mln  at recurring operating profit level.

Author:Anna Larionova
Category:General News
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