BOC Report and accounts 2005 - Alle jaarverslagen

46 The BOC Group plc Annual report and accounts 2005 Operating review (comparing 2005 with 2004)
Asia/Pacific Most of the countries in south and south east Asia achieved good results in 2005 with especially strong
performances in India,Thailand and Bangladesh. Results in India were additionally supported by a profit from the
disposal of some land in Bangalore.
At the same time, trading conditions during 2005 were difficult in Malaysia and industrial activity continued to
decline in Hong Kong as production drifted to mainland China.This trend also continued to affect Taiwan but to a
lesser extent.
BOC’s industrial products business remains relatively undeveloped in China. Few attractive opportunities have
been identified but growing demand for helium provides a better prospect.
The growth of automobile production stimulated demand for welding gases and investment in special gases
and packaged chemicals production facilities supported increased sales of these products in Asia generally.
In Japan, both turnover and adjusted operating profit were similar to a year ago.
An improved performance in the south Pacific region was driven by demand from the natural resources
sector and increased sales of safety products while consumption of welding products and gases by the
manufacturing sector grew more slowly.This reflects somewhat slower growth in the Australian economy than
in 2004.
Growth was focused in the mining regions of Western Australia, Queensland and Papua New Guinea. BOC
was also successful in winning significant contracts to supply safety and personal protective products to Xstrata in
Australia and to New Zealand Steel.These added to similar contracts won with Western Mining in 2004.
The construction of a new special gases centre is under way at Wagga Wagga, in Australia, to meet the
increasing demand for packaged chemicals such as ammonia, ethylene oxide and sulphur dioxide. Meanwhile the
gradual re-development of BOC’s retail Gas and Gear stores that began in 2004 continued in 2005 and is now
approximately two thirds completed.
BOC’s joint venture company supplying liquefied petroleum gas in Australia faced the twin challenges of a
sharp rise in input costs and the warmest winter on record in 2005. Lower consumption for heating applications
therefore led to a decline in volumes.
BOC Edwards
Change
on 2004 1
2005 Change (constant
£ million on 2004 currency)
Turnover 826.0 +1% +2%
Operating profit 17.4 –63% –63%
Adjusted operating profit 2 38.1 –20% –21%
1. A reconciliation of results for 2004 at 2004 and at 2005 rates of exchange is shown on page 40.
2. A reconciliation of adjusted operating profit with operating profit is shown on page 41.
3. All comments below are on a constant currency basis.
The upturn in semiconductor equipment spending that had helped BOC Edwards’ order intake and financial
performance in 2004 was not repeated in 2005.At the same time, margins continued to be adversely affected by
weakness of the US dollar, which is the currency in which much of BOC Edwards’ revenue is earned.The adjusted
operating profit for 2005 would have been approximately £9 million more if transactions had been conducted at
the exchange rates of a year ago.Adjusted operating profit was therefore lower in 2005, despite some initial benefit
from cost reduction programmes.
Where new semiconductor or liquid crystal display (LCD) business was placed, BOC was generally successful
in retaining or improving its market share. Demand for integrated subsystems combining vacuum and exhaust
management technologies grew in 2005. BOC Edwards is now launching a new plasma abatement system for the
destruction of ozone-depleting PFC chemicals, which are found in the exhaust streams after etch processes in
semiconductor, LCD and solar cell manufacture. BOC Edwards also became a leading supplier of subsystems for
immersion lithography. For the latest generation of LCD fabrication units, BOC Edwards has also launched its own
iFxK and iHxK high-capacity pumping systems. For semiconductor applications, a new cost-effective turbomolecular
pumping system, whose magnetic bearings are controlled without the use of sensors, was developed.
Demand for component cleaning services and electronic materials was slightly lower as some semiconductor
production rates were reduced in 2005 to reduce stock levels. During 2005 BOC Edwards formed a joint venture
to extend its component cleaning business into Taiwan.
While nitrogen trifluoride prices continued to fall in 2005, BOC Edwards made good progress with its
alternative technology of on-site fluorine generation systems for cleaning vapour deposition chambers. Production
of fluorine generators has already been established in Korea to achieve lower production and distribution costs to
serve the expanding customer base in Asia.
In October 2004 BOC Edwards expanded its electronic materials offering to include wet chemicals for flat
panel display, semiconductor, and solar cell customers throughout Asia, by purchasing a 50 per cent ownership in
Asia Union Electronic Chemical Corporation (AUECC) .This company also formed a joint venture with Shanghai
Huayi (Group) Company to supply wet process chemicals to the growing electronics manufacturing industry in
China.Through the joint venture,AUECC will use Shanghai as a base to produce, package and distribute a full range
of ultra high-purity process chemicals for the semiconductor and flat panel display industries.
In 2005 BOC Edwards retained strong positions in the bulk gases markets of Taiwan and China and improved
its position in Korea. New production capacity was added to the existing pipeline network in the Hsinchu business
park in Taiwan and additional business was obtained in the business parks at Suzhou, China. BOC Edwards has also
established a position supplying customers in the new Cheng Du park in China. In Korea, BOC won potentially
significant gases business with Samsung, having previously been a major supplier of semiconductor equipment.
BOC’s joint venture company also won new business with semiconductor manufacturers in Singapore.