Rhone-Poulenc Targets Debt-Equity Below 0.5 By '97

The FFr 85.8 billion French pharmaceuticals and chemicals major Rhone-Poulenc (RP) says reducing its debt is a priority following its $2 billion leveraged acquisition of Fisons Laboratory of the United Kingdom.

Jean-Marc Bruel, vice chairman of the Rhone-Poulenc group told visiting journalists from the Asia-Pacific that his company had targeted reducing the net debt to equity ratio from the present 0.61 as at December 31, 1996 to under 0.5 by end-1997. Following the mega Fisons acquisition in 1995, the ratio had shot up substantially for RP to 0.7 and the company was now determined to bring it down.

Reducing debt-equity is our priority this year'', Bruel explained, saying RP had also successfully divested a part of the Fisons business portfolio after the acquisition. The divestment, to the tune of $0.6 billion, was in business lines which Fisons had, but which did not match businesses RP was in. The synergies we have achieved following the acquisition was of around $140 million'', Bruel said.

 

Another of RP's major targets for the years 1997 and 1998 is to improve its financial results by 20 per cent every year, minus exceptional situations.

RP is the seventh largest pharmaceutical and chemical group worldwide, with earnings from operating activities at FFr 7.7 billion, net income at FFr 2.7 billion, employees numbering 75,250, a worldwide presence through 160 countries and significant investments in research and development, totalling a hefty FFr 8.1 billion.

The share of life sciences clearly dominates RP's business now, with pharmaceuticals (36.5 per cent), animal health (9.6 per cent), and plant health (13.1per cent). Bruel said the share of fibres and polymers as part of the group's total turnover, which currently stands at 12.6 per cent, would dip a little to under or equal to 10 per cent, since the company also plans to divest some more of its fibres businesses. On the chemicals side, there would be a change in its portfolio, aimed at substantially increasing profitability.

Bruel said Rhone-Poulenc was hurt badly in 1996 by two factors