RHODIA: Results for the First Nine Months of 2001; Net Income Affected by Provisions for Restructuring in a Sharply Deteriorating Business Environment

Business Wire, Oct 25, 2001

Business Editors

PARIS--(BUSINESS WIRE)--Oct. 25, 2001

Rhodia (NYSE:RHA), one of the world's leaders in specialty chemicals, today published its financial results for the nine months through September 30, 2001. Highlights include:

-- Net sales generated by the Fine Organics Division rose by 11.1% during the
first nine months of the year. On a comparable basis (constant structure and
exchange rates), net sales increased by 1.9%, with a positive volume effect ( 
2.7%) and a negative price effect (- 0.8%). Rhodia ChiRex confirmed strong
growth in both its core businesses (contract research and manufacturing
activities) as well as the diversification of its customer base. Organic
Intermediates suffered from the downturn in the world economy and the perfumery
business was temporarily affected by the recent events in the United States.
The Division's EBITDA declined by 44% to $63 million mainly due to provisions
for restructuring costs related to Pharmaceutical Ingredients and the impact of
raw materials prices, which remained high throughout the nine-month period.
Excluding non-recurring items, EBITDA declined by 25% to $86 million.

-- Net sales for the Consumer Specialties Division increased by 5.4%. On a
comparable basis (constant structure and exchange rates), net sales declined by
2.1%, with a negative volume effect (- 2.8%) only partially offset by a
positive price effect (  0.7%). Growth in the surfactants and food additives
businesses was driven by the launch of new products. The performance of
Phosphorus & Performance Derivatives was impacted primarily by the recession in
the United States, exacerbated by the events of September 11. In addition to
the synergies generated by the integration of Albright & Wilson, actions taken
since April will produce their full effect in 2002 and enable the Division to
achieve savings in excess of the $82 million initially forecast. Division
EBITDA rose by a total of 5.6%.

-- Net sales for the Industrial Specialties Division declined by 1.8%. On a
comparable basis (constant structure and exchange rates), net sales rose by
2.7% due to a positive price effect (  2.6%) and stable volumes. Apart from the
high price of raw materials, the Division suffered from a slowdown of demand
for silicones and paints. Division EBITDA fell by 13.8%.

-- Net sales generated by the Polyamide Division fell by 5.6%. On a comparable
basis (constant structure and exchange rates), net sales declined by 1.7% as a
result of a positive price effect ( 3.3%) offset by a negative volume effect
(-5%). The Division is suffering from a sharp deterioration in its end markets
(textiles, carpets and engineering plastics used in electronics) and from the
high prices charged for its raw materials during the first nine months of the
year. In addition, the temporary shutdown of an upstream polyamide production
unit generated non-recurring expenses of $22 million. Excluding exceptional
items, EBITDA was $141 million, down 28%. At the same time, the Division
generated positive cash flow as a result of reducing investments and
inventories.

-- Net sales of the Services & Specialties Division increased by 7.6%. On a
comparable basis (constant structure and exchange rates) net sales rose by
5.9%, reflecting a positive price effect (8.1%) and a negative volume effect
(-2.2%). Electronics & Catalysis suffered from a rapidly shrinking electronics
market. Most of the Division's growth was therefore generated by the Acetow
business--which grew twice as fast as the overall market--and the Eco Services
Enterprise. The Division's ability to raise prices led to an increase (1.4%) in
EBITDA.

Jean-Pierre Tirouflet, Chairman and CEO of Rhodia, stated: "The current business environment is obviously difficult; Rhodia is responding quickly and strongly. Certainly, the 2001 results will be penalized by our accelerated restructuring programs, but we will nevertheless be generating positive free cash flow during the second half of the year. The actions underway will have a positive impact on our results as early as the beginning of next year. Due to our efforts and strategy since 1998, a third of our businesses are the most profitable worldwide in their sector. Rhodia's teams are actively working to achieve the same result throughout the Group. That is our commitment."

RESULTS THROUGH SEPTEMBER 30, 2001
----------------------------------------------------------------------
In millions of US dollars        First 9 months         First 9 months
                                    of 2000                of 2001
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Net sales                            4,993                  5,105
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EBITDA                                 789                    511
----------------------------------------------------------------------
Operating income                       349                    101
----------------------------------------------------------------------
Net income (after minorities)          155                    -51
----------------------------------------------------------------------
Net earnings per share                0.88(a)               -0.28
----------------------------------------------------------------------
Net earnings per share excluding
 non-recurring items                  1.06(a)                0.32
----------------------------------------------------------------------
(a) Average number of shares: 179,109,188

                               Figures converted from 1 euro = $0.9131
                               Certain percentages are approximate