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Technology differentiation is a must: Raj Gupta
By siliconindia
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Wednesday, 04 June 2003, 19:30 IST
PHILADELPHIA: Raj L. Gupta, Chairman and Chief Executive Officer of Philadelphia-based specialty materials company Rohm and Haas Company (NYSE: ROH) spoke on Tuesday at the Bernstein Strategic Decisions Conference in New York City, and said the company's long term goals of 5 to 6 percent sales growth per year, and earnings growth of greater than 10 percent per year, remain the company's long-term targets, with Research and Development a key driver for the company's success.
"Technology differentiation is the competitive advantage in today's environment, and we have continued to invest in Research and Development as a way of creating sustainable value for our customers and ourselves," said Gupta. Gupta noted that in 2003, approximately 35 percent of the company's Research and Development spending is focused on growth projects, up from 11 percent in 1997.
In reviewing the company's focus on operating efficiencies, Gupta said the implementation of an Enterprise Resource Planning system throughout the company remained on schedule, with approximately 40 percent of the sales revenue currently supported by the new systems, with that figure increasing to 70 percent by year-end. He further noted that the deployment of other system- wide information technology tools is providing a robust, integrated network that enables further productivity improvements. The emphasis throughout the company on working capital reductions in 2002 has yielded a 3 percent improvement, or 4 days, said Gupta, with a target for 2003 of 9 days reduction, which would represent a 7 percent improvement.
Gupta noted that between 2000 and 2002, the company reduced its debt by approximately $1.4 billion and used about $680 million for bolt-on acquisitions. He noted that the company's strong history of cash generation and commitment to annual dividend increases over the past 25 years has resulted in a 10 percent compounded annual dividend growth rate.
Gupta did not comment on the company's second quarter earnings outlook, but said that Rohm and Haas will provide more specific guidance about the second quarter performance in its regularly quarterly update, which will be issued in late June.