NEWS OF THE WEEK
CHEMICAL FIRMS EXPAND PROFITS
prices. In China, rising auto manufacturing and spending on infrastructure such as water treatment facilities boosted sales. Agriculture more severely impacted results at DuPont, where the segment’s earnings were 7% lower than last year because of reduced sales of DuPont’s soybeans, lower crop protection volumes, and reductions in corn acreage around the world. Performance materials were a bright spot; earnings for the segment grew 3%.
SECOND QUARTER: Demand for
performance chemicals helps fend off currency effects
U
.S. CHEMICAL COMPANY executives had
plenty to complain about in the second quarter. Of early-reporting firms, all but one—Eastman Chemical—reported lower sales compared with last year’s quarter. The minus signs were due to the effects of a strong dollar, weak agriculture markets, and lower prices for some products—the latter a side effect of cheap raw material and energy costs. Still, demand for performance materials, plus past cost-cutting efforts, helped most firms preserve or even grow earnings. At Dow Chemical, sales fell more than 13% to $12.9 billion while earnings rose 19.1% to reach almost $1.1 billion. Analysts acknowledged that the company performed better than expected, yet they curbed their enthusiasm. “Weak crop prices and a sluggish end market have limited agriculture demand,” wrote Laurence Alexander of investment bank Jefferies in an investor note. Indeed, Dow’s agriculture segment saw volumes decrease 2% and prices sink 6%. “Strength in the construction, transportation, and consumer goods end markets was offset by broad-based weakness in most other industrial end markets,” Alexander added. Although revenues fell, Dow enjoyed strong demand for performance plastics, where volumes increased by 9% compared with the prior year’s quarter, and for performance materials and chemicals, which grew by 4%. In a conference call with analysts, Dow CEO Andrew N. Liveris said U.S. consumers helped drive demand; he mused they had more cash on hand because of low gas
SECOND-QUARTER CHEMICAL RESULTS A strong dollar crushed sales, but most firms preserved earnings SECOND-QUARTER 2015 SALES EARNINGSa $ MILLIONS
Dow Chemical DuPont Eastman Huntsman Corp.
$12,879 8,595 2,533 2,740
$1,064 1,025 300 155
CHANGE FROM 2014 SALES EARNINGS
–13.1% –11.4 3.0 –8.3
19.1% –3.8 3.1 6.9
PROFIT MARGINb 2015 2014
8.3% 11.9 11.8 5.7
6.0% 11.0 11.8 4.9
a After-tax earnings from continuing operations, excluding significant extraordinary and nonrecurring items. b After-tax earnings as a percentage of sales.
DuPont’s results for the quarter included its performance chemicals business, which was spun off as a separate company, Chemours, on July 1. The business’s operating earnings sank 55% because of lower prices for titanium dioxide and negative currency effects. Overall, DuPont saw earnings erode by 3.8% to just more than $1 billion on a sales drop of 11.4%. At Eastman, sales and earnings were up compared with last year’s second quarter because of acquisitions, primarily the one involving amines specialist Taminco. But sales and earnings in Eastman’s legacy acetate tow and acetyl chemical businesses dropped. Currency headwinds pinched results at Huntsman Corp., but overall the firm saw earnings grow nearly 7% to $155 million even as sales shrank by 8.3%. Again, it was performance products and advanced materials to the rescue. Earnings in the two Huntsman segments grew by a combined 20%.—MELODY BOMGARDNER
CHEMISTRY OLYMPIAD Asia dominates and U.S. wins one gold and three silver medals China emerged as the top-performing team during the 47th International Chemistry Olympiad last month, winning the four highest-ranked gold medals; South Korea and Taiwan also won four gold medals. The high school chemistry competition, in which teams of four students represent each country, took place on July 20–29 in Baku, Azerbaijan. The U.S. team, which is sponsored by ACS, put on a strong performance, winning one gold and three silver medals. “We’re extremely thrilled that we took
away four medals,” says head mentor Kelli Slunt, a chemistry professor at the University of Mary Washington. David Wang of Monta Vista High School, in Cupertino, Calif., won the seventh-highest-ranking gold medal as well as the highest score in the lab practical portion of the competition. Team members Soorajnath Boominathan of Oklahoma School of Science & Mathematics, in Oklahoma City; Bryce Cai of Barrington High School, in Illinois; and Janice Ong of Thomas Jefferson High School for
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Science & Technology, in Alexandria, Va., each earned a silver medal. “I’ve been studying for this competition for so many years now, and it’s so great to see that all of the years of hard work and sacrifices culminated in this one event,” Wang says. This year, 290 students from 75 countries participated in the competition, which awarded 35 gold, 62 silver, and 92 bronze medals. The 48th International Chemistry Olympiad will be held in Karachi, Pakistan, in 2016.—LINDA WANG
