Smooth integration of BASF's textile dyes business

Citation

(2001), "Smooth integration of BASF's textile dyes business", Pigment & Resin Technology, Vol. 30 No. 6. https://doi.org/10.1108/prt.2001.12930faf.001

Smooth integration of BASF's textile dyes business

Smooth integration of BASF's textile dyes business

Keywords: DyStar, BASF, Textiles, Dyes

Several months on from the integration of BASF's textile dyes business, DyStar is positive about the benefits of the merger. "The aim was to put costs on a competitive long-term basis and reinforce our global market leadership by pooling our strengths and optimising structures. The start went smoothly and our initial success shows that we are on the right track," reported DyStar's CEO Alfred X. Rad (see Plates 1 and 2).

Plate 1 DyStar's general managers from left: Alfred X. Rad (CEO), Helmut Raulwing (CFO) and Dr Clemens WillÅe (CMO)

Plate 2 Innovation has high priority at DyStar

DyStar (including BASF's textile dyes business from October) reported sales of around DM1.7 billion (EUR 862 million) in 2000, an improvement of 17 percent compared with 1999. On an adjusted basis (i.e. compared with DyStar's and BASF's combined textile dyes sales figures for the full year), sales were 2 percent higher than in the previous year. In the few months of this year, demand for textile dyes declined in major markets such as the USA, Japan and Turkey. DyStar reported sales of DM890 million (EUR 455 million) from January to May 2001. That was 37 percent more than in the first five months of 1999 (9 percent less on an adjusted basis). Despite weak market conditions at present, DyStar aims to report sales of around DM2 billion (EUR 1 billion) at year-end 2001.

DyStar reports that there are currently signs of an earnings turnaround. In 2000 the company posted an operating profit of DM86 million (EUR 44 million) before restructuring costs of DM98 million (EUR 50 million). This year, Alfred X. Rad expects to report a positive EBIT after restructuring costs.

The company is forecasting synergies of around DM 200 million (EUR 102 million) from the merger. Action has already been taken to ensure that this potential is realised and Alfred X. Rad expects these synergies to improve the company's earnings performance over the next two years. He sees optimisation of global production as the most important project. At present, DyStar is examining the competitiveness of all its production sites. Two facilities in Japan (Kurosaki and Shizuoka) and one in Brazil (Jacareí) have been shut down since October 2000 and the Mt. Holly site in the USA was closed on 1 October 2001. Relocating production of dyes to other DyStar facilities will ensure a substantial improvement in capacity utilisation and reduce costs.

DyStar expects to generate further benefits by amalgamating its marketing and administration functions at a central site. These functions are currently divided between its sites in the centre of Frankfurt, Frankfurt-Höchst, Leverkusen, Ludwigshafen and Cheadle (UK). A new building for around 600 employees is being constructed in the Höchst Industrial Park in Frankfurt, Germany. Building work started in the middle of this year and DyStar plans to move into the new premises as from mid-2002. The company expects its new central headquarters to enhance communication and cooperation, support the development of a new corporate culture and bring a further reduction in costs.

As a result of synergies generated by the merger, DyStar's worldwide headcount has declined from 4,600 to 4,300 since October 2000. The company has about 2,000 employees in Germany.

Alfred X. Rad highlighted the new DyStar Group's strong position in all product segments as one of its main advantages. "We market the most extensive range of textile dyes and pigment preparations in the world and can provide optimum recommendations for all customer requirements," he stressed. "In the next few months, DyStar will be embarking on a careful streamlining of a few former DyStar and BASF product ranges that overlap, while keeping a close eye on its customers' interests."

The company continues to focus on innovative products that bring customers technical, commercial and ecological benefits. Products introduced in the past five years already account for about 20 percent of sales and Alfred X. Rad announced that the company intends to go on investing 3 to 4 percent of sales in research and development.

DyStar also informs us that its new regional sales structure has proved effective, as it has improved its focus on local customer requirements. "With our extensive range of products, services and innovations, we create tangible benefits for our customer," States Alfred X Rad.

Further details are available from DyStar Textilfarben GmbH & Co., Deutschland KG. Tel: +49 (0) 69 21 09 27 34; Fax: +49 (0) 60 21 09 20 05.