Albemarle posted surging fine chemistry operating profits as a result of positive pharma trends and other tailwinds.
Operating profit at the fine chemistry services business grew 23 per cent year on year as Albemarle combined revenue growth with margin expansion. Albemarle attributed the performance, in part, to its pursuit of specialty pharma opportunities.
“Fine chemistry services’ profits reflected that business beginning to reap the benefits of a diversified line of opportunities across the agricultural, lubricant, renewable chemistry, and specialty pharma sectors we have targeted for growth”, John Steitz, chief operating officer at Albemarle, said.
Speaking to investors following publication of the results Steitz went on to highlight “positive trends within our pharmaceuticals portfolio” that are making the fine chemistry business more profitable.
Improving profitability was shown by operating profit growth outstripping an uptick in revenues. In the first quarter Albemarle posted a 23 per cent increase in operating profit, compared to a seven per cent rise in sales.
Margin gains come after Albemarle made efforts to win more complex, longer duration work. “The impact of evolving our portfolio towards complex, higher margin, longer duration opportunities was evident during the quarter as operating margins rose impressively”, Steitz said.
Albemarle is optimistic for the rest of the year. “Although uncertainty persists regarding the strength and duration of a global economic recovery, the full year outlook for…fine chemistry remains favourable, supported by positive industry trends and new business opportunities”, Albemarle said.
Spending the warchest
Operating profit growth at the fine chemicals unit helped Albemarle increase its cash reserves by 10 per cent quarter-on-quarter. Albemarle now has more than $500m (€380m) in cash and wants to use some of its funds for takeovers.
“I would expect over the next 12 to 18 months you will see us do a deal. We are kicking a lot of tires and we are taking some steps to develop some relationships that would allow someone to be more comfortable in doing a transaction with us”, Luke Kissam, CEO of Albemarle, told investors.