The impressive performance of the unit helped counter-act the under-performance of the firm's other divisions, which specialise in plastics and civil explosives.

Sales from the chem.-pharma raw materials division increased by 26 per cent, reaching €700.7m in fiscal 2006. The unit develops and produces crude-oil based speciality products for the pharmaceutical and chemical industries, and the increased fortunes of the division are attributed largely to expanded capacity and larger volumes produced by the group's refineries in Salzbergen and Hamburg.

"While the refinery in Salzbergen has already been working at high capacity for some years, the plant in Hamburg, which was acquired from BP in 2004, also reached full capacity for the first time during the past year," explained Dr Horst Hollstein, H&R Wasag CEO.

The implementation of the company's 'Project 18' following the integration of the former BP operations also had a positive impact on the unit's profits. Project 18, to run from 2005 to 2007, is the company's comprehensive restructuring programme, which calls for cost-reductions, focus on niche markets and higher sales volumes driven by the refineries in Salzbergen and Hamburg.

Improved market condition with reduced burdens from raw materials compared to the previous year also contributed to the favourable financial results, with the crude oil market remaining relatively stable.

At the beginning of the year the company upped the prices for their chemical-pharmaceutical specialities, passing on the cost of high priced raw materials that the firm had been contending with over the last few years.

Fierce competition, fixed prices and a time lag over the previous years had prevented H&R Wasag from passing on the rising material costs to customers.

The success of the chemical-pharmaceutical raw materials division over 2006 drove profit growth for the company as a whole, which achieved operating profits of €83.9m, up 200 per cent on 2005. Pre-tax profit also rose sharply, up by 283 per cent to €75m.

"Having had to focus in the past mainly on operational restructurings and integrations, in 2006 we entered a phase of global growth," said Hollstein. This growth is set to continue, as the company plans to expand its core activities, with emphasis on capacity at the German refineries and international expansion.

The company has introduced the successor to Project 18, Project 40, which is due to run from 2006 through to 2009 and focuses on expanding manufacturing facilities and production. The company is aiming to increase the output of its crude oil based specialities by 20 per cent as a result of the new programme.

The company also intends to step up its activities on niche markets in the chemical-pharmaceutical business division in a bid to expand its worldwide presence.