Utz-Hellmuth Felcht, the group's chairman, said that the results were in line with expectations and suggested that Degussa's core business (fine and industrial chemicals, construction chemicals, performance materials, coatings and polymers) would be able to report a small improvement in sales and earnings for the full year.

Overall sales slipped 4 per cent to €2.69 billion, although in the core business, first-quarter sales were down 2 per cent to €2.63 billion, which Degussa said was 'entirely due to adverse exchange rate movements'.

Earnings before interest and taxes (EBIT) grew by 7 per cent to €224 million in the core business), and were up 5 per cent overall to €217 million. Group net income improved from €73 million in the first quarter of 2003 to €89 million.

Degussa's non-core businesses include SKW Metallurgie, Oxxynova, the C3-based oxo chemicals business and Goldschmidt's industrial chemicals operations, all of which are earmarked for divestment.