Chemical Specialties

Extensive Expertise

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Chemical Specialties encompasses those Rohm and Haas businesses that independently serve the specialty chemical needs of their customers. The group has a broad range of chemistries and other expertise at its disposal, from gene-switching mechanisms useful in a range of biological applications to chromatography chemistries for the pharmaceutical industry. Chemical Specialties is also the segment of the Rohm and Haas portfolio in which the company plans to develop independent new businesses, whether they originate with the company's R&D efforts or through an acquisition of technologies from an external source.

Overall, the Chemical Specialties group performed well during 1998. Sales for the year totaled $875 million, a 1% decrease from the sales posted in 1997 by the businesses that now comprise Chemical Specialties. Volume was flat. Earnings for the group were $72 million, down 15% from 1997.

The largest of the Chemical Specialties businesses, Agricultural Chemicals, posted slightly higher sales over 1997; results were best in North America and Latin America. Dithane fungicide and the Mimic™, Confirm® and Intrepid™ molt accelerating compounds (see page 20) drove gains in both sales and profitability. The business's biotechnology group licensed its gene-switching technology to Invitrogen, a maker of materials used in biotechnology research.

During the year, Agricul-tural Chemicals increased its focus on building relationships with distributors around the world. The business increased its ownership stake in AgLead, a key distributor in Japan, to 70%, and took a minority interest in Isagro Italia, a firm that commercializes and distributes crop protection products in Europe. Agricultural Chemicals also signed a joint venture agreement for the production of Dithane in China. In 1999, Agricultural Chemicals plans continued development of its product distributor network in Latin America, Europe and Asia-Pacific. The business also expects to benefit from its supply chain efforts around the world, reducing inventories while improving customer service.

Ion Exchange Resins capped its multiyear turnaround efforts with a good performance in 1998. Over the past few years, this business has focused on rationalizing its product portfolio, improving its cost structure and strengthening its operations. In 1998, this process had yielded sufficient progress to allow the Ion Exchange Resins to begin to target new markets and new applications of its specialty resins.

With the exception of the European and Asia-Pacific Regions (see Focus on Asia-Pacific Region), Ion Exchange Resins turned in healthy sales and earnings around the world. The business's specialty focus drove performance of its products for makers of chemical warfare decontamination kits, a highly differentiated product with demanding performance standards. Electric utilities, particularly those that operate nuclear-powered generators, fueled growth of resins for industrial water purification, another application with exacting specifications. The business also posted particularly strong demand from producers of specialty filters for drinking water. While cost-consciousness will remain a priority, Ion Exchange Resins expects to continue its newly earned focus on profitable growth in 1999.

Rohm and Haas's Biocides business experienced reasonably good demand during 1998, yielding roughly flat sales for the year compared to 1997. The business's improved cost structure helped produce the business's first significant earnings gain in several years. Continued strength in Europe and North America were somewhat offset by weakness in the paper and pulp markets, in which manufacturers worldwide faced overcapacity and resulting low-cost exports from Asia. Also during 1998, Biocides strengthened its commitment to its markets with increased focus on developing newer, safer processes that yield greater customer value. The SeaNine® biocide product, which offers shipbuilders an environmentally friendly means of protecting ship hulls from barnacle growth, benefited from broader awareness of the environmental concerns caused by tin-based anti-barnacle formulations of marine paints.

Primenes posted volume growth in 1998 in its fuel and plastics additives segments. In the business's annual customer satisfaction survey, respondents rated Primenes in the top quartile for product quality, order processing, delivery, responsibility and the quality of the business's partnerships. Primenes expects strong growth in 1999.

TosoHaas, a joint venture between Rohm and Haas and Tosoh Corp., realized good results driven by rapid growth in the pharmaceutical and biotechnology industries. The business expects growing demand in 1999 from established as well as newly developing areas requiring bioseparation tools.

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