Ciba reports weaker than expected start to 2008

Brendan Cummins, Chief Executive Officer, comments: “We have not had the strong start to the year that we were anticipating a few months ago.

Dramatic changes in the currency and raw material environment had an adverse effect on the first quarter results and although in general we are seeing good underlying growth in many of our markets, we are also clearly starting to feel the impact of the economic slowdown on overall sales growth.

This is particularly apparent in NAFTA, where growth has slowed and in Europe, where we are experiencing weakness in a number of industries. Asia and the Middle East are proving to be more resilient.”

“We expect this trend to continue in 2008, with some markets delivering good growth, and others slowing. In the short term, we will address under performing areas of the business and focus on increasing sales prices on an ongoing basis to compensate for the higher raw material costs.”

Sales in Swiss francs of CHF 1,557 billion (2007: CHF 1,659 billion) were significantly impacted by currency movements in the first quarter of 2008.

Sales in Swiss francs were 6% lower and sales in local currencies were 1% lower. Sales growth in local currencies was mixed, with Europe 2% down, the Americas flat and Asia 1% higher.

Raw material costs surged in the middle of the quarter at an unprecedented rate and the increases were significantly higher than anticipated, up 4.5 percent over the first quarter of 2007. The Company expects that raw material costs will remain around these levels in 2008.

Industry focused strategy based around core innovation strength

The Company will further strengthen its industry focus by bringing together all its plastics related additives and pigments businesses to create an industry/market facing organization to better leverage its strong position in the plastics industry.

The Company is also implementing its new approach to innovation, with a focus on six core technologies, which between them represent 95 percent of sales and each have significant potential for further application and development.

This will involve bringing together R&D activities for each of the technologies and creating dedicated research centers. In addition, a New Growth Platform is being established for embryonic technologies and external research partnerships. The existing R&D investment of around 4% of sales will be maintained, with a split of 75% going into the six core technologies and 25% into the New Growth Platform.

Outlook

Underlying business performance remains strong in many of the Company’s core markets, however, in a number of areas there are clear signs that the economic slowdown is impacting growth. The Company’s financial results are also being adversely impacted by the relative strength of the Swiss franc, as well as very high raw material costs.