NEWS OF THE W EEK
CHEMICAL EARNINGS YET TO SLIP FOURTH QUARTER: Foreign sales are
bailing out ebbing U.S. growth
D
ESPITE ALL the gloom about the U.S. economy
and high energy prices, chemical company fourth-quarter results thus far have held relatively firm. Chemical companies are crediting continuing strength in overseas markets for their good fortunes. Profits also depended on how well companies were able to pass along higher costs to their customers.
FOURTH-QUARTER 2007 RESULTS Earnings remained strong despite some declines SALES EARNINGSa $ MILLIONS
Air Products Albemarle Cabot Dow Chemical DuPont Eastman Chemical H.B. Fuller Hercules Mosaic PPG Industries Praxair Rohm and Haas
$2,473.6 599.2 711.0 14,227.0 6,983.0 1,737.0 360.9 540.7 2,195.4 2,874.0 2,523.0 2,343.0
CHANGE FROM 2006 SALES EARNINGS
$257.0 58.6 29.0 806.0 522.0 103.0 30.8 35.0 394.0 194.0 316.0 180.0
9.1% 2.5 8.5 16.3 11.3 9.0 -3.8 9.5 44.2 15.0 18.8 15.6
16.3% -7.0 -48.2 -15.5 23.7 6.2 40.6 0.6 497.9 26.8 17.5 0.6
PROFIT MARGINb 2007 2006
10.4% 9.8 4.1 5.7 7.5 5.9 8.5 6.5 17.9 6.8 12.5 7.7
9.7% 10.8 8.5 7.8 6.7 6.1 5.8 7.0 4.3 6.1 12.7 8.8
a After-tax earnings from continuing operations, excluding significant extraordinary and nonrecurring items. b After-tax earnings as a percentage of sales.
The largest U.S. chemical company, Dow Chemical, posted record sales of $14.2 billion in the quarter, representing a 16.3% increase over the same period in 2006. Yet the company’s earnings slipped, dropping 15.5% during the quarter, down to $806 million. Earn-
ings for Dow and other companies are from continuing operations and exclude significant extraordinary and nonrecurring items. But Dow CEO Andrew N. Liveris regards the quarter as successful for his company, with results still among the strongest in the company’s history. He credits this to company efforts to raise prices in the face of escalating hydrocarbon costs. “Given the very difficult conditions we faced—a weak U.S. economy paired with purchased feedstock and energy costs that rose 11% year-over-year—these results demonstrate yet another year where our strategy to mitigate these high input costs was proven successful,” he told analysts. DuPont posted a strong rise in both sales and profits. Sales during the fourth quarter increased 11.3% versus the year-ago period, reaching nearly $7.0 billion, while earnings increased by 23.7% to $522 million. The company says global diversification has helped offset slumping U.S. markets. DuPont’s sales in emerging markets such as Brazil, India, and China grew by 20% during the quarter. Carbon black maker Cabot saw a large earnings decline. Although sales increased by 8.5%, earnings fell 48.2%, down to $29 million. The company says that its selling prices have not increased fast enough to offset rising energy costs. Two specialty chemical makers have continued to increase volumes but they experienced little change in earnings. Rohm and Haas and Hercules both saw sharp increases in sales while earnings remained flat. Raj L. Gupta, Rohm and Haas’s CEO, says he is pleased that earnings kept pace with high energy costs and “despite steady deterioration in the U.S. building and construction markets.” Industrial gas makers continue to rack up strong earnings. Air Products saw sales increase in its most recent quarter by 9.1% while earnings climbed by 16.3%. Praxair posted an 18.8% increase in revenues while profits increased by 17.5%. Praxair CEO Stephen F. Angel says overseas results drove the company’s success. “Sales growth was robust globally, led by South America and Asia,” he says.—ALEX TULLO
NANOMATERIALS EPA launches voluntary nanotech stewardship program amid criticism EPA has launched its Nanoscale Materials Stewardship Program for voluntarily collecting data on engineered nanomaterials from manufacturers. The program has two parts. The first asks manufacturers to submit any data they already have on production and safety of nanomaterials to EPA in the next six months. The second part is a two-year project in which companies will work with EPA to develop new health and environmental data on those products.
“The program will allow EPA to more quickly assemble the information needed to ensure appropriate oversight of the products of this promising technology,” James B. Gulliford, EPA’s assistant administrator for prevention, pesticides, and toxic substances, said in a statement. But the voluntary nature of the program and the fact that EPA apparently is not willing to handle nanomaterials differently from other chemicals has observers worried.
WWW.C E N- ONLI NE .ORG
10
FE BRUARY 4, 20 0 8
“The agency’s current oversight approach is inadequate to deal with nanotechnology,” says J. Clarence (Terry) Davies, a senior adviser to the Project on Emerging Nanotechnologies at the Woodrow Wilson International Center for Scholars. “With the approach outlined by EPA and because of the weakness in the law, the agency is not even able to identify which substances are nanomaterials, much less determine whether they pose a hazard.”—DAVID HANSON
