GERMAN CHEMICAL INDUSTRY SEES LOWER PROFITS
West Germany's chemical
industry fears mounting risks will hurt earnings but hopes 1987
turnover will stabilize around 1986's 140 billion marks, Josef
Strenger, a board member of the industry association VCI, said.
    Strenger, management board chairman of Bayer AG <BAYG.F>,
told a news conference at the Hanover trade fair the main
dangers were stagnation in world trade, the lower dollar as
well as crude oil and commodity prices.
    Prospects of higher operating costs were also seen harming
earnings, he said. Turnover took a considerable downturn at the
start of 1987 after falling 5.9 pct in 1986.
    The chemical industry, which relies heavily on exports, was
badly hit by mark appreciation in 1986 and lower turnover was
mainly due to foreign exchange losses, Strenger said.
    Exports fell 6.4 pct to 72 billion marks in 1986 and
competition from U.S. And British firms increased. Savings from
lower oil and commodity prices were eaten up by price
competition and increased costs.
    Strenger said 1986 operating profits of German chemical
firms were slightly worse than the year before but the improved
financial and balance sheet structure, after three good years,
neutralized the negative impact.
    Strenger said the industry would try to increase production
in the U.S. To make up for lost export possibilities out of
West Germany.
    The lower dollar was the main reason for an 8.3 pct fall in
exports to North America, an 11.4 pct drop to Latin America and
22.6 pct plunge to the Middle East.
    Exports to Western Europe eased 3.5 pct and Far East
exports, due to an economic revival in Japan, dropped 5.2 pct.
    Strenger noted that the industry had lost public confidence
following several cases of chemical pollution of the Rhine late
last year.
 REUTER
