DSM elastomer profits lower; group net profit up 18 percent

Amsterdam - Royal DSM NV's elastomer operation announced a lower-than-expected operating profit for the second quarter of 2006 due to a margin squeeze from increased raw material prices.

Specific figures for the elastomer business were not available, however.

A DSM spokeswoman said the company did not release quarterly results for individual operations.

Despite the setback, the Dutch company's performance materials division, which manufactures elastomers as well resins, engineering plastics and the polyethylene fibre Dyneema, reported a 14 percent rise in second-quarter operating profit to €88 million.

For the first half of this year, the division increased operating profits by 28 percent to €172 million, compared to €144 million during the same period last year.

Net sales across the division were up by 10.6 percent for the quarter to €700 million and 15 percent for the half to €1382 million.

Margins for the resin business ''remained at a good level'', the company said in a statement.

Across its operations, DSM reported an 18 percent rise in net profit for the quarter to €157 million, despite a €90 million increase in raw material costs, and a 20 percent rise in first half net profit of €318 million.

''Developments in the performance materials cluster in particular are really good,'' DSM chairman Peter Elverding said in a statement.

''I still expect the generally favourable conditions in most of our end markets to continue in the second half of the year.

''However, given the fact that raw-material prices are increasing strongly from an already very high level, we might experience some delay in passing on these price rises to our customers.''

Elverding expected DSM's full year operating profit to be higher than in 2005.

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Second quarter results from Royal DSM NV