COVER STORY
s-·.? ANNUAL
SURVEY
CHEMICAL PRODUCERS No recovery in 2002 and few mergers affected the ranking, which C&EN reorganized to reflect the globalized face of U.S. industry ALEXANDER H.TULL0, C&EN NORTHEAST NEWS BUREAU
C
&EN*S ANNUAL RANKING OF U.S. CHEMICAL MAKERS HAS
gotten a new look. The Top 75 U.S. Chemical Producers ranking has become the Top 50 U.S. Chemical Producers. This year, C&EN's list includes U.S.-owned companies only; Foreign-owned companies used to be included in the ranking, but now C&EN runs a separate ranking of the HTTP://WWW.CEN-ONLINE.ORG
U.S. sales of the top 25 foreign companies. The ranking was modified to reflect changing times in the chemical industry By ranking U.S. and foreign-owned companies together, C&EN pitted global sales of U.S. chemical companies against the sales administered by the U.S. headquarters of overseas producers. When the list started in 1969, this was not a problem. U.S.-based subsidiaries of European companies acted autonomously from their parent companies, making them independent American chemical compaC & E N / MAY 12, 2003
21
I
COVER STORY •
STILL SLUGGISH Profitability improved in 2002, while sales remained sluggish
RANK RANK 2002 2001 COMPANY
1 2 3 4 5 6 7
CHEMICAL CHEMICAL SALES CHANGE SALES AS t$ MILLIONS) FROM % OF TOTAL 2001 2001 SALES HEADQUARTERS
1 2 3 5 4 7 8
Dow Chemical $27,609.0 -0.7% DuPontd 26,728.0 -0.2 ExxonMobil* 16,408.0 2.9 General Electric* 7,651.0 8.2 Huntsman Corp. 7,200.0 --15.3 PPG Industries 5,996.0 1.1 Equistar Chemicals 5,537.0 -6.3 6 Chevron Phillips 5,473.0 -8.9
8
100.0% Midland, Mich. 100.0 Wilmington, Del. 8.0 Irving, Texas 5.8 Fairfield, Conn. 100.0 Salt Lake City 74.3 Pittsburgh 100.0 100.0
CHEMICAL OPERATING PROFITS AS IDENTIFIABLE CHEMICAL OPERATING CHEMICAL ASSETS AS RETURN ON OPERATING CHANGE % OF TOTAL OPERATING CHEMICAL OPERATING PROFIT % OF TOTAL CHEMICAL ASSETS PROFITS* FROM 6 PROFIT MARGIN ASSETS ASSETS0 ($ MILLIONS) 2001 1$ MILLIONS)
$1,165.0 -6.6% 100.0% na na na 7.2 830.0 -5.9 6.0 1,125.0 -29.5 na na na 86.2 729.0 24.40
4.2% $39,562.0 na 22,179.0 18,124.0 5.1 14.7 13,414.0 na na 12.2 5,238.0
100.0% 99.5 11.9 2.3 na 66.6
2.9% na 4.6 8.4 na 13.9
0
100.0
def
5.052.0
100.0
def
41.0
nm
100.0
0.7
6,109.0
100.0
0.7
213.0 1,358.0 817.3 na
nm 1.9 -5.5 na
100.0 100.0 101.4 na
4.0 26.5 15.9 na
6,273.0 7,401.0 8,308.2 8,046.0
100.0 100.0 97.8 82.9
3.4 18.3 9.8 na
Houston The Woodlands, Texas
-44.0
9
10 Eastman Chemical 10 11 Praxair f 11 9 Air Products 12 12 Rohm and Haas 13 15 Lyondell Chemical 14 14 Honeywell 15 13 Monsanto 16 16 Occidental Petroleum 17 20 Dow Corning 18 19 Crompton Corp. 19 49 0MGd 20 17 Solutia 21 21 IMC Global 22 24 Lubrizol 23 23 Engelhard 24 22 FMC Corp. 25 25 W.R. Grace 26 18 Hercules 27 26 Cabot Corp.f 28 28 Millennium Chemicals 29 29 Ferro Corp.d 30 27 Great Lakes Chemical 31 33 Sunoco 32 30 Cytec Industries 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
34 32 31 35 36 39 41 38 44 37 42 43 40 46 47 48 45
Ashland' H.B. Fuller0 Borden Chemical Georgia Gulf Kerr-McGee Noveon Terra Industries Wellman Albemarle CF Industries 3Md Arch Chemicals Goodyear NL Industries ISP Stepan Resolution Performance Products 50 Sigma-Aldrich
5,320.0 -1 ? 5,128.0 -0.6 5,125.6 -6.2 5,021.0 2.1
100.0 100.0 94.9 87.7
Kingsport, Tenn. Danbury, Conn. Allentown, Pa. Philadelphia
3,262.0 1.1 3,205.0 3 3 3,088.0 --17.8
100.0 14.4 66.1
Houston Morristown, N.J. St. Louis
174.0 -36.5 57.0 9.6 366.0 -52.8
100.0 2.3 140.2
5.3 1.8 11.9
6,196.0 3,512.0 5,115.0
98.9 12.7 57.5
2.8 1.6 7.2
2,704.0 --12.5 2,610.1 7.0 2,374.2 -5.6 2,244.7 79.9 2,241.0--20.4 2,057.4 5.0 1,983.9 7.6 1,870.0 1.1 1,852.9 -4.6 1,817.2 5.5 1,705.0- -34.9 1,557.0 -6.8
36.8 100.0 93.2 45.7 100.0 100.0 100.0 49.8 100.0 100.0 100.0 100.0
Los Angeles Midland, Mich. Middlebury, Conn Cleveland St. Louis Lake Forest, III. Wickliffe, Ohio Iselin, N.J. Philadelphia Columbia, Md. Wilmington, Del. Boston
nm -128.0 274.1 389.5 244.7 4.5 -95.9 nm 41.0 46.4 182.3 70.2 202.4 16.8 2.2 289.3 186.9 -2.2 1.6 254.2 269.0 -22.3 162.0 -21.0
def 100 106.0 113.1 100.0 100.0 100.0 92.9 100.0 100.0 100.0 100.0
def 10.5 10.3 def 1.8 8.9 10.2 15.5 10.1 14.0 15.8 10.4
3,069.0 5,674.7 2,374.2 2,060.9 3,342.0 3,637.1 1,860.1 1,962.9 2,872.0 2,687.7 2,693.0 2,067.0
18.5 100.0 83.6 88.1 100.0 100.0 100.0 65.0 100.0 100.0 100.0 100.0
def 4.8 10.3 def 1.2 5.0 10.9 14.7 6.5 9.5 10.0 7.8
1,554.0 -2.3 1,528.5 1.8
100.0 100.0
Red Bank, NJ. Cleveland
195.0 102.7
1.6 21.7
100.0 100.0
12.5 6.7
1,904.0 1,604.5
100.0 100.0
10.2 6.4
1,401.5- -12.1 1,362.0 7.8 1,346.2 -2.9
100.0 9.5 100.0
nm 116.3 43.0 186.7
100.0 def
8.3 3.2
1,717.7 1,325.0
100.0 20.6
6.8 3.2
3.4 -1.4 -9.1 2.1 6.1 0.6 0.9 -6.2 6.9 --12.1 -6.8 2.0 -9.6 4.8 7.4 5.2
17.1 100.0 100.0 100.0 32.3 100.0 100.0 100.0 100.0 100.0 5.8 100.0 6.8 100.0 100.0 100.0
Indianapolis Philadelphia West Paterson, NJ. Covington, Ky. St. Paul, Minn. Columbus, Ohio Atlanta Oklahoma City Cleveland Sioux City, Iowa Shrewsbury, NJ. Richmond, Va. Long Grove, III. St. Paul, Minn. Norwalk, Conn. Akron, Ohio Houston Wayne, Ν J . Northfield, III.
120.5 -4.0 87.0 50.0 56.4 -36.0 8.7 53.7 98.3 174.6 nm 1.0 140.9 37.7 -5.4 nm 41.3 50.2 107.1 6.6 nm -27.0 136.0 -3.5 4.1 32.9 69.4 15.3 57.8 -56.4 123.0 -3.7 33.9 8.7
100.0 25.7 100.0 100.0 100.0 def 100.0 100.0 100.0 100.0 100.0 4.5 100.0 16.5 100.0 100.0 100.0
9.0 6.7 4.5 4.3 8.0 0.1 13.2 def 4.1 10.9 def 14.3 3.5 7.4 6.6 14.6 4.5
1,751.5 944.0 961.4 1,011.8 875.6 1,660.0 1,629.1 1,128.1 965.2 1,193.0 1,233.9 1,221.0 939.1 636.9 1,111.5 1,829.8 439.7
100.0 14.0 100.0 100.0 100.0 16.8 100.0 100.0 100.0 100.0 100.0 8.0 100.0 4.8 100.0 100.0 100.0
6.9 9.2 5.9 5.3 11.2 0.1 8.6 def 4.3 9.0 def 11.1 3.5 10.9 5.2 6.7 7.7
740.0 --14.3 663.9 2.3
100.0 55.0
Houston St. Louis
102.0 -28.7 na na
100.0 na
13.8 na
793.0 na
100.0 na
12.9 na
1,290.0 1,256.2 1,247.9 1,230.8 1,196.0 1,069.3 1,042.4 1,014.0 980.2 956.2 953.0 939.4 937.9 875.2 845.3 748.5
a Operating profit is sales less administrative expenses and cost of sales, b Chemical operating profit as a percentage of sales, c Chemical operating profit as a percentage of identifiable assets, d Sales include a significant amount of nonchemical products. · Profits and profitability ratios are after tax. f Fiscal year ended Sept 30. g Fiscal year ended Nov. 30. def * deficit, na * not available, nm * not meaningful.
22
C&EN / MAY 12. 2003
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COVER STORY MELTING POT German and French firms top the 2002 list of U.S. operations of foreign-owned companies
RANK RANK 2002 2001 COMPANY
U.S. CHEMICAL SALES ($ MILLIONS) 2002
U.S. U.S. CHEMICAL CHEMICAL SALES AS % OF TOTAL SALES AS % OF TOTAL CHEMICAL SALES COUNTRY IKS. SALES
CHANGE FROM 2001
1 2 3 4 5
— Bayer*
6 7 8
2,580.9 -18.7 2,517.7 -3.2
100.0 57.2
23.2 100.0
9 10
5 Degussa 7 Ondeo Nalco — Dainippon Ink & Chemicals* 8 Akzo Nobel — Air Liquide
2,292.1 10.7 2,231.4 -2.8 2,104.9 -13.7
100.0 63.4 96.7
29.3 23.6 32.3
11 12 13 U 15
10 Formosa d — B0C ·' Syngenta — 12 Rhodia 11 Celanese
2,075.0 3.8 1,940.9 -6.9 1,864.0 -1.2 1,704.6 -7.3 1,680.0 -13.7
100.0 100.0 82.5 100.0 100.0
100.0 37.0 35.4 27.2 41.1
16 17 18 19 20
— Agrium k Nova Chemicals e u Shin-Etsu 9 Potash Corp. 13 Solvay
1,425.0 2.9 1,410.0 0.1 1,268.5 -8.3 1,147.9 -9.1 1,118.5 -29.5
100.0 100.0 100.0 100.0 57.5
16 Ciba Specialty Chemicals 15 DSM f — Sasol 17 Clariant 18 Cognis
1,094.0 -6.4 1,048.4 -12.5 1,006.5 141.8 974.5 -6.0 789.4 -8.2
100.0 100.0 100.0 100.0 100.0
1 3 2 6
21 22 23 2k 25
BASF Atofina Shell Oil ICI
$8,501.0 -8.9% 7,381.7 2.0 5,1 U.2 10.6 5,104.0 -7.6 3,080.1 -3.3
100.0% 100.0 45.0 8.0 100.0
44.4% 24.2 28.0 36.1 33.5
Germany Germany France U.K./Netherlands U.K.
CHEMICAL OPERATING PROFITS' ($ MILLIONS)
CHANGE FROM 2001
OPERATING PROFIT MARGIN 6
$125.7 4,389% na na na na na na -22.0 196.8
IDENTIFIABLE OPERATING CHEMICAL RETURN ON ASSETS CHEMICAL ($ MILLIONS) ASSETS0
1.5% $10,933.6 na na na na na na 6.4 1,546.1
1.1% na na na 12.7
na na
na na
na na
na na
na na
Japan Netherlands France
50.0 na 292.0
-56.5 na -6.6
2.2 na 13.9
2,738.5 na na
1.8 na na
Taiwan U.K. Switzerland France Germany
na 182.3 na na -94.5
na -27.7 na na nm
na 9.4 na na def
na na na 1,482.4 3,017.7
na na na na def
68.4 45.6 21.8 60.0 19.5
Canada Canada Japan Canada Belgium
na -85.0 139.9 17.8 na
na nm -14.6 -47.6 na
na def 11.0 1.6 na
623.0 1,090.0 2,300.5 1,899.5 na
na def 6.1 0.9 na
24.0 16.6 16.4 16.3 26.7
Switzerland Netherlands South Africa Switzerland Germany
na na 53.0 -242.8 na
na na 18.8 nm na
na na 5.3 def na
558.2 na 1,035.1 209.4 na
na na 5.1 def na
Germany France
a Operating profit is sales less administrative expenses and cost of sales, b Chemical operating profit as a percentage of sales, c Chemical operating profit as a percentage of identifiable assets, d Sales include a significant amount of nonchemical products, e Fiscal year ended March 31, 2002. f Fiscal year ended June 30. dtf * deficit, na * not available, nm « not meaningful.
nies. Today, chemical companies are organized differently with less emphasis placed on regional organizations and more focus on global organizations centered around product lines. In such a climate, it seems unfair to rank BASF behind Huntsman Corp. The new rankingfixesthis problem and has other advantages as well. Now, the U.S. sales as a percentage of a foreign company's total chemical sales will be listed, providing readers with a measure of how important U.S. sales are to the overall company Moreover, the foreign list is slightly more inclusive than it used to be. For example, Bayer was never included in the ranking because C&EN doesn't count pharmaceutical sales and the company
doesn't separate its U.S. pharmaceutical salesfromits US. chemical sales. Now, Bayer heads the list. Likewise, companies such as BOC, Air Liquide Syngenta, and Agrium have been included for the first time. Also, Canadian companies Potash Corp. of Saskatchewan and Nova Chemicals are included on the foreign list. They used to be treated like US. companies. In fact, although Nova is officially registered in Calgary, Alberta, key executives have been working out of Pittsburgh for some time. South Africa's Sasol joins the list because of its acquisition in 2001 of surfactants maker Condea, which has given the company a foothold in the U.S. One company, Ondeo Nalco, is still a
little difficult to classify. The firm used to be Naperville, IlL-based Nalco Chemical but was purchased by French water treatment giant Suez in 1999. Ondeo Nalco is still headquartered in Illinois, but because it is French owned, it is included on the foreign list. Similarly, Dainippon Ink & Chemicals owns Reichhold Chemical, based in ResearchTHangle Park, N.C., and Fort Lee, NJ.-based Sun Chemical. Other than the changes, the list of the Top 50 U.S. chemical producers is free of drama. For the second time, Dow Chemical heads the list, with $27.6 billion in sales. The company led the list for the first time last year after its 2001 acquisition ofUnion Carbide. DuPont is close behind, with
Overall, 2002 wasn't a great year for the chemical industry. Total sales for the 50 U.S. companies listed decreased by 1.9%, down to $182.9 billion. 24
C & E N / MAY 1 2 . 2 0 0 3
HTTP://WWW.CEN-ONLINE.ORG
$267 billion in sales. The gap between the companies should widen ifDuPont divests itsfibersbusinesses—with $5.6 billion in 2002 sales—later this year. ExxonMobil, as usual, has come in third, with $16.4 billion in sales. General Electric has overtaken Huntsman to come infourth.GE's chemical sales have grown by 8.2%, to $7.7 billion, largely because of its acquisition of BetzDearbornfromHercules. Huntsman's sales have declined by 153% to $7.2 billion over the same period. There are many changes in the rest of the top 10. BASF, which was sixth last year, drops off the main list and is presented as number two on the foreign list. PPG Industries, which overtook Chevron Phillips, takes BASF's place this year. Rounding out the list are Equistar Chemicals, Chevron Phillips, Eastman Chemical, and Praxair— which debuts in the top 10, in part by overtaking Air Products & Chemicals. Shell Oil, 10th last year, moves to the foreign list this year. Elsewhere on the list, there are few big movers. Hercules dropped from 18 to 26 because of the BetzDearborn sale. OMG moved upfrom49 to 19 on the list because it has a full year of income from its acquisition ofthe dmc2 metals and catalyst business from Degussa. By truncating the list to 50, a few of the companies that have made the list in the past dropped off it. These companies include Vulcan Materials Corp., Mississippi Chemical, Phelps Dodge, Alcoa, Ethyl Corp., International Paper, Sterling Chemicals, and Farmland Industries. SigmaAldrich is at the bottom of this year's list, with $664 million in chemical sales. OVERALL, 2002 wasn't agreatyear for the chemical industry Total sales for the 50 U.S. companies listed decreased by 1.9%, down to $182.9 billion. Chemical revenues at 26 companies—many of them larger companies such as Dow, DuPont, and Monsanto—fell in 2002. Operating profits fared a little better. Out of the 50 companies ranked for sales, 46 reported operating profits. Six companies, such as Huntsman and SigmaAldrich, don't report thesefiguresfor chemical operations. In 2002, they increased by 4.4% over 2001, one of the worst years in the chemical industry's history, hitting $10.4 billion. Moreover, onlyfivecompanies— Equistar, Occidental Petroleum, OMG,Terra Industries, and CF Industries—posted losses. Last year, eight companies reported losses. Praxair generated more operating profits than any other chemical company in HTTP://WWW.CEN-ONLINE.ORG
2002. It was followed by Dow and GE. I In terms of operating profit margins, Praxair isfirst,followed by competitor Air Products & Chemicals. Hercules jumped from 10 to three. Dow dropped from 29 to 33. Praxair also comes in first in operating returns on chemical assets, followed by Engelhard and PPG. On the foreign list, French and German companies appear near the top. Already mentioned were Bayer and BASF, which have $8.5 billion and $7.4 billion in sales, respectively However, if Bayer separated its pharmaceutical and chemical results for the U.S., Bayer certainly would have placed behind BASF, ifnot lower on the list. Though I
next year, as 2003 promises to be every bit as inactive as 2002 when it comes to mergers and acquisition activity DuPont's spinoff ofTextiles & Interiors is the only major change expected, and that might not happen this year. Of course, there could be surprises, but the chemical industry does seem to be past the consolidation phase that appeared in the late 1990s. Many industry executives talk about a recovery to begin by the end of the year. This, coupled with easing feedstock prices following a quick resolution of hostilities in Iraq, may spell better profits for the industry, but this is not likely to have a dramatic impact on thelbp 50. It could, how-
METHODOLOGY
Compiling The Lists
C
&EN ranks chemical producers by sales, defined as sales of chemical and allied products, except pharmaceuticals. Ranking the companies by chemical sales is the only way that privately held companies and some diversified producers can be included. If, for example, C&EN used market capitalization, the ranking couldn't include Huntsman Corp., General Electric, or ExxonMobil. Because chemical sales are derived from company annual reports, nonchemical products often creep in. For instance, DuPont includes sales of seeds along with agrochemicals in its agricultural and nutrition segment. C&EN does not restate prior-year results, except when a company changes accounting procedures. Nor does C&EN routinely restate prior-year rankings. So OMG was able to jump from 49th in 2001 to 19th because it had a full year of sales from its 2001 acquisition of dmc2. In the list of foreign-owned companies, C&EN uses sales administered by the U.S. headquarters of the companies. These figures are as close to U.S. sales as possible, but companies don't post regional sales consistently. For Shell Oil, U.S. sales are listed, but for B0C, sales in the Americas are given. A comparison of total global operations of chemical producers is scheduled to appear in the July 28 issue of C&EN. To compile the information for the lists, C&EN uses, for the most part, official company documents such as annual reports and 10-K filings with the Securities & Exchange Commission. In the case of privately held companies and some foreign-owned companies, company interviews are used.
the number of nonchemical sales for Bayer in the region are unknown, it is a safe bet that they are over $1.2 billion. Atofina has overtaken Shell Oil at third. ICI isfifthin U.S. chemical sales. It is followed by Degussa, Ondeo Nalco, Dainippon Ink & Chemicals, Akzo Nobel, and French industrial gas maker Air Liquide. Cognis, which was toward the bottom during the two previous years, makes the list at 25. Sales at the foreign-owned firms also decreased. They declined by 3.9% to $61.5 billion. Only 11 foreignfirmsreported operating income, but this limited number showed the same trends as the U.S.-owned companies. They increased 35% to $635 million. The list probably won't change much
ever, give the petrochemical makers a lift in the profitability rankings. But unexpected things happen in this industry Few people would have expected that natural gas prices would have climbed to record levels this February. And unforeseen events usually sabotage predictions in the chemical industry Perhaps this is why executives are very reluctant nowadays to make them. C&EN is, too. • MOREONLfttiE A table that compares profitability ratios for the Top 50 U.S. chemical companies appears online, though the numbers also appear in the main Top 50 table. See http://www.cen-0nUiM.0r9. C & E N / MAY 12, 2003
25
