Hoechst Refocuses Following Restructuring

Hoechst's European industrial business is forecast to move out of the red this year, although the figures will still be a long way from an acceptable return on equity, said Jurgen Dormann, chairman of the board at Hoechst AG, speaking at the firm's Fall meeting (see also Marketletter December 5).

Mr Dormann specified that the board has set a target for net return of about 15%, compared with its current rate of around 4.6%. With this in mind, said Mr Dormann, it is expected that the profit fall of 2 billion Deutschemarks ($1.3 billion) will be turned around by 1996. In addition, he noted, substantial cost savings should result from the huge restructuring program. Cost savings for 1995 alone are expected to reach 250 million marks.

Continuing on his theme of restructuring, Mr Dormann said that in view of the dimensions involved, conventional measures no longer suffice. It is vital that the group improves its competitive position by streamlining the organization, by spinning off businesses and by cooperative ventures with partners. Through spin-offs and joint ventures there will be a provision for individual activities within the company framework to enable these businesses to become more flexible and competitive in their specific markets, he added.