Rhone-Poulenc Rules Out Demerger

Jean-Ren Fourtou, chairman and chief executive, predicted in an interview that the companys share price would increase without a split.

He said the quality of the groups businesses even chemicals would be recognised by the market in the next two years, and that there were already signs of this. Rhone-Poulenc shares have performed strongly this year, climbing by more than 40 per cent from FFr104.90 at the end of 1995 to Mondays close at FFr150.50.

On the day last month when the company reported a 13 per cent increase in third-quarter net income to FFr756 million, they rose three per cent.

 

Even at yesterdays levels, however, they are only marginally above the FFr146 price paid by institutional investors in the second stage of privatisation almost three years ago.

Fourtou said more than half of the groups chemicals businesses were in excellent health. This was in spite of the fact that the operating margin achieved by the division in the first nine months was little more than five per cent.

He said this figure was composed of some businesses with margins of 15 per cent and others with negative margins. Our problem is how to administer the least bad solution possible to some of our businesses, he said.

After 20 years of restructuring, Fourtou made clear the company would take its time over addressing this problem. He said the companys era of acquisitions had ended, having bought a string of businesses in the past 10 years - including Fisons, the UK pharmaceuticals group.

The company had also attained the objectives of being present in all global markets and being among the worlds 10 leading companies in its principal businesses. Today our focus is on profitability and no longer on an expansion that was strategically necessary, he said.