Armin Meyer, Chairman of the Board and CEO, comments: “Ciba Specialty Chemicals made further progress in 2006.  We achieved solid sales growth, as well as underlying improvements in margins and a higher free cash flow. On top of this, we completed major strategic milestones.  We divested our Textile Effects and Masterbatch businesses, refined our strategic direction and launched the Operational Agenda, our program to improve the effectiveness and efficiency of key processes throughout the organization. 

Going forward, we will focus on our three core businesses, Plastic Additives, Coating Effects and Water & Paper Treatment, shaping the Company along the needs of these businesses – not just geographically, but in strengthening marketing & sales and innovation, as well as striving for more efficiency in production and administrative support structures.”

Net income for the fourth quarter of 2006 was CHF 84 million, (2005: CHF 476 million loss - substantial adjustments were made in 2005 in connection with the Textile Effects segment). 

Strategic milestones 2006

After a comprehensive review of strategy in 2006, with the sale of the Textile Effects business, the Company concluded that it will focus on three core businesses, Plastic Additives, Coating Effects and Water & Paper Treatment.  Innovation and production investment will primarily be directed at the high potential growth markets in Plastic Additives and Coating Effects, with the emphasis in Water & Paper Treatment on profitability improvements.  In addition, investment will continue into high potential niche businesses, such as Personal Care, Oil & Lubricants, Electronic Materials and Expert Services.

Reflecting the refined strategy, a number of portfolio adjustments were also made in 2006, with the divestment of Masterbatch from the Coating Effects segment and the acquisition of Cantox, for the Expert Services business.
 
Asia remains a strategic focus for Ciba Specialty Chemicals. With the sale of Textile Effects, operations in a number of countries have been reviewed and optimal routes to market are being identified.