General Meeting of 2 June 2009

The Chairman's message to the Tessenderlo Chemie Annual General Meeting of 2 June 2009 can be consulted in the "Related Documents" section on the right hand side of this page. The message is available in English, Dutch and French.

Ladies and Gentlemen,
Shareholders,

The group had to contend with particularly stormy economic conditions in 2008.

Business during the first half year was buoyant, the group witnessing a historic increase in the prices of most major primary raw materials. A reversal set in after the summer, taking prices down to more normal levels at the beginning of 2009.

We also suffered a stronger downturn in production volumes from November onwards than usually recorded around this period and which saw us end the year with surplus stocks.
 
Such conditions are usually unfavourable for our company, whose business is still mainly focused on the primary processing of primary raw materials.

However, we are proud to present you with a spectacular improvement in results. Indeed, the group's revenue increased by around 15 % and the recurring operating result by 57 %.

The improvement came almost entirely from the Chemicals business, and more particularly from products intended for the agri-food industry. In fact the demand has remained sustained, borne by the growth in the food needs of the world population.

Given that almost one third of the group's business is focused on these markets, historically in Europe but now also in the United States, it has therefore benefited from this excellent economic climate.

The group's Specialities business group also notched up good performances, but did not manage quite the same growth.
On the other hand, the Plastics Converting business group started to feel the pinch of the crisis that hit the construction and public works sector in 2008.

The group's net profit amounted to 140 million euros, a historical high.

That is why your Board of Directors proposes to raise the dividend to 1 euro net per ordinary share. 

It has also decided to this year again offer all of the group's staff the possibility of subscribing to a capital increase exclusively reserved to it. This transaction, which we carry out every year, aims to involve all of the staff in the group's development and growth. It has been approved by this morning's extraordinary general meeting. As in previous years, it relates to a maximum number of 150,000 new shares. The subscription price has been set at 18.95 euros. This price corresponds, after deducting the dividend, to the maximum discount specified by law for this type of operation.
The dividend increase has not kept pace with the result, but your Board of Directors believes it wise to anticipate the worst for 2009, which is not auguring well for the economy.

Indeed, today the economic climate is very different from the euphoria of 2008. Over the first four months of the year, sales have fallen by over 20 % on average, plummeting by over 40 % for several businesses.

Fertilisers are struggling most, which meant that the usual spring campaign simply was not held.

Plastics are also recording sharp downturns, both for PVC resin and converted end products that are now bearing the brunt of the construction industry slump.

Specialities have not been spared, but it is business group that is best weathering the crisis, with even the gelatine activity posting growth.

This sharp reversal of fortunes has already forced us to take a certain number of measures.

We have announced the closure of two plants in France active in plastics converting to cut down on long-term overcapacities.

We have also slowed down production in a certain number of our plants by using technical unemployment measures when possible to limit the rise in stocks.

We are also cutting the current investments for the year down to a strict minimum.

At this point, we see no reason to modify the group's global strategy but the crisis is forcing us to be more selective.
As far as acquisitions are concerned for example, we are not excluding the possibility of grabbing the opportunities triggered by the crisis, but on the strict condition that they are coherent with our strategic objectives and that they do not throw our balance sheet off keel.

We are lucky to have a solid balance sheet which does not give any grounds for concern at financial level and we wish to keep this low debt structure until we emerge from the crisis.

The first quarter saw us publish negative results. Unfortunately, no improvement is on the horizon for the second quarter. With the exception of our agricultural activities in the United States, where there are early signs of recovery, the outlook remains gloomy in Europe, where most of our business is concentrated.

As things stand, we do not have enough visibility to make any forecasts for the year as a whole. The best that we can hope for is that the economy will pick up again in the autumn. Such a change would only have a limited impact on the financial year 2009, which can already be written off as mediocre, but could pave the way for better performances in 2010.

Gérard MARCHAND
CEO