Chemical & Engineering
NEWS OCTOBER 28, 1968
CHEMICAL EARNINGS HIT TWO-YEAR HIGH If you work for a chemical company and have that feeling that your last pay raise was not really big enough and that your next one is a bit overdue, now might be a good time to tackle your boss about it. The basic chemical industry has just enjoyed its best financial quarter in more than two years. With returns from most of the major companies in hand, it appears that chemical makers earned about 13% more, after taxes, in the third quarter of this year than they did in the third quarter of last. This improved showing puts earnings for the first nine months of 1968 some 5% ahead of the same period last year. Basic chemical sales are also advancing smartly too: up some 10% for the third quarter of this year over the year-ago quarter and up some 9% for the nine-month period. Basic chemical earnings have been slowly improving all year; they could hardly do much else after the industry's sorry performance in 1967 when earnings fell 16% from their 1966 peak. In the first quarter of this year they were but 2% off the year-earlier pace. In the second quarter they
Monsanto's Bock Fibers spur recovery
managed a 6% gain, the first such year-to-year increase since the third quarter of 1966. And now they have registered the 13% increase for the third quarter. Another encouraging aspect of thirdquarter 1968 performance is the improved profit margin. With sales up 10% for the quarter, profit margin, expressed as after-tax earnings as a percentage of sales, improved to 6.0% from 5.8% for the third quarter of last year. This slight improvement follows nine consecutive quarters in which profit margin failed to match the year-earlier level. However, all these signs of improvement do not occasion unbridled enthusiasm in chemical company board rooms. For one thing, industry earnings at the three-quarter mark of 1968 are still some 15% off the 1966 pace. They are also some 4% shy of the 1965 pace, although sales have grown some 27% during this three-year span. Another problem is the spotty nature of the apparent earnings recovery. For instance, of the Big Seven chemical makers, American Cyanamid, Du Pont, and Monsanto are running well ahead of 1967 at the three-quarter mark. But Allied, Celanese, Dow, and Union Carbide find themselves below year-ago earnings levels. President Clifford D. Siverd of American Cyanamid says the company's 17% gain in earnings for the first three quarters of this year reflects increased sales volume and lower unit costs. Higher levels of industrial production, increased demand in the textile industry, and the rise of construction activity have brought on the added sales. Du Pont attributes much of its 2 3 % earnings gain for the first nine months of this year to the improved syntheticfiber market. And president Edward J. Bock of Monsanto says his company's 10% earnings gain at the threequarter mark were mainly due to a general improvement in markets for
acrylic, nylon, and polyester fibers. He adds that demand for chemicals and plastics has been good with some movement toward better prices. Of the companies still on the downside, Allied is apparently in the worst shape with earnings at the threequarter mark running 3 1 % off the already depressed 1967 level. The third quarter was even worse with operating earnings off some 5 1 % from the third quarter of 1967. And in addition, the company has extraordinary items amounting to a charge of $11.5 million against three-quarter earnings. President John T. Connor says that recognition of these losses is part of a program to eliminate unprofitable activities. Celanese, with earnings at the threequarter mark some 8% off the 1967 level, is picking up from the effects of a serious strike earlier this year. President John W. Brooks attributes much of the 36% increase in thirdquarter earnings to "substantially increased fiber sales." And Union Carbide, with three-quarter earnings still off some 7%, has at least had the satisfaction of posting its first year-to-year quarterly earnings gain for more than
Allied's Connor His company still hurting OCT. 28, 1968 C&EN
11
CPI earnings up 13% over third-quarter 1967, profit margins also improve Third Quarter
Three Q uarters
%
1968
Change on 1967
Net sales Net income (Millions of dollars) % % Change Change 1968 on 1967 1968 on 1967
Net sales Net income (Millions of dollars)
%
1968
Company
Change on 1967
ι
___ Earnings Per Share 1968 1967
CHEMICALS 106.6
8
4.2
-12
329.1
7
14.9
-21
1.35
1.74
303.2
3
6.9
-51
949.3
2
35.7
-31
1.27
1.84
246.6
13
19.4
43
764.6
8
64.5
17
1.45
1.25
52.6
38
4.0
117
158.0
30
12.2
83
2.28
1.25
Celanesed
307.3
9
17.7
36
924.7
15
40.0
-8
2.76
3.03
Diamond Shamrock
108.2
5
7.0
-14
322.1
4
22.1
-14
1.39
1.71
-15
1102.1
7
92.5
-8
3.21
3.37
Air Reduction» Allied Chemical
6
American Cyanamid American Enkac
e
Dow
376.7
7
29.6
Du Pont
867.0
14
95.0
27
2587.0
13
281.0
23
5.90
4.77
GAF
149.5
7
6.4
10
416.5
9
15.6
13
0.96
0.82
Grace
418.3
11
12.2
39
1290.8
8
44.2
15
2.28
1.98
Hercules
182.9
13
14.1
25
528.7
9
39.2
8
1.98
1.85
3.9
-16
324.4
11.4
15
2.27
1.91 2.31
-3
-1
Koppers'
116.0
Monsanto
437.0
14
24.1
46
1337.2
8
83.5
10
2.53
Olin
248.1
13
13.9
12
761.0
11
46.6
4
2.94
3.03
39.1
12
1.4
27
115.2
10
4.5
22
0.81
0.66
Rohm and Haas
104.8
18
7.7
25
318.8
12
27.0
14
4.80
4.22
Stauffer Chemical*
115.5
14
5.8
6
357.9
12
23.1
2.31
2.42
16
21.4
25
1.3
18
1.96
1.66
25
163.7
10
7.86
15
1.60
1.37
Reichold Chemical
-3
7.2
30
0.4
57.4
13
2.9
Abbott
87.9
15
7.7
19
254.0
13
22.0
13
1.65
1.46
Baxter Labs
30.5
17
2.6
15
89.2
18
7.4
20
0.58
0.49 1.15
Virginia Witco
DRUGS
Cutter Labs
13.2
6
0.5
-30
37.5
2
1.8
-21
0.90
Miles Labs
60.2
24
3.2
18
162.7
11
8.1
23
1.79
1.52
Parke-Davis
65.6
6
4.3
17
184.0
4
12.3
-12
0.83
0.94
Chas. Pfizer
178.3
10
15.5
9
505.3
6
43.4
8
2.07
1.94
Richardson-Merrell
73.5
11
8.2
19
Robins. A. H.
29.1
13
3.7
12
85.6
17
10.2
10
1.60
1.49
Upjohn
82.2
10
8.5
5
247.2
9
26.8
11
1.83
1.66
1
Fiscal year starts July 1
ALLIED INDUSTRIES Chesebrough Ponds Colgate Palmolive De Soto Chemical Coatings
46.1
7
5.3
9
129.4
5
12.5
10
1.19
1.10
297.6
7
10.7
11
847.3
8
27.3
9
1.83
1.66
36.6
13
1.9
10
105.5
14
5.1
11
1.53
1.38
26
l . o
NA
0.70
0.14
-1
2.07
2.09 1.27
ι
7.9
22
0.8
NA
14.1
Interchemical
76.7
6
3.1
-3
233.4
8
9.5
National Starch & Chemical
30.8
10
2.2
21
89.5
7
5.9
20
1.53
Shulton*
30.3
4
3.1
7
67.6
4.4
7
1.42
1.33
Sun Chemical
24.9
2
0.8
24
68.8
1.6
29
1 1.10
1 0.84
Diamond Crystal Salt*
-2 1
a Air Reduction also had an extraordinary credit of $1.6 million, or 14 cents per share, from sale of two vinyl fabrics plants. b Allied also had extraordinary charges amounting to $22.4 million. c For 36-week period ended Sept. 8. .... m r ^Λ Λ d Celanese also had an extraordinary nonrecurring charge of $59.8 million. οι ^„tc mun~n e Dow also had sales up for the nine and three months, respectively, of $118.7 million and $50.7 million and net earnings of $6.3 million (21 cents The company also D er share) and $3.3 million (11 cents per share) from subsidiary companies that were considered in 1968 for the first time. had extraordinary income of $4.8 million (16 cents per share) for the nine months and $2.4 million (8 cents per share) for the three months from /aKoppeSrsnalso hacTa n^mHIion, or 33 cents per share, gain due to change in depreciation policy and a $1.1 million, or 22 cents per share, charge due to a writeoff of certain assets. g Stauffer also had a $500,000, or 5 cents per share, charge due to a net loss on investments. Λ Diamond Crystal's 1967 returns affected by strike. Company's fiscal year starts April 1. i Shulton also had a $505,000 extraordinary gain in the third quarter.
two years with a 4% boost for the third quarter of this year over the third quarter of last. Dow's earnings picture is a little confused. If sales and earnings from some operations consolidated for the 12 C&EN OCT. 28, 1968
first time this year are included along with some extraordinary income from the sales of some investments, the company shows a 2% earnings increase after nine months of this year. Another confusing factor in evaluat
ing Dow's performance is that in com paring 1968 results with 1967 results, the comparison is with a very good year, whereas with most other major chemical producers the comparison is with a very poor year.
