Chemical & Engineering
NEWS JULY 28., 1969
CPI SALES-MODEST PROGRESS For the basic chemical industry it looks as though the second quarter will turn out to have been close to a repeat of the first. From financial statements available at press time it seems likely that second-quarter industry sales will be up about 7% over the second quarter of 1968 while earnings will have posted about a 5% gain. In the first quarter of this year both sales and earnings of the industry were up between 6 and 7% over the first quarter of 1968. This industrywide picture of continued modest progress in both sales and earnings cannot be a heartening one for basic chemical makers. With sales growth again exceeding earnings growth, the industry's already depressed profit margin has slipped another notch, probably to about 6.2% for the past 12-month period. Also, with earnings
up only about 6% at the half and with growing signs of some economic slowdown in the second half, the industry can now look forward to, at best, a very small earnings gain over 1968 by the end of the year. On a company-by-company basis the earnings pattern was surprisingly mixed in the second quarter. Dow, Celanese, Rohm and Haas, Commercial Solvents, and Union Carbide showed better earnings performance in these second three months. But Hercules, Diamond Shamrock, American Enka, and American Cyanamid have seen their earnings performances weaken as the year progresses. In recent months Dow's earnings statement has been confused by a number of special items. But in the second quarter the company got its before-tax operating earnings moving
upward again. In the first quarter such earnings were off 4% from the year earlier period, in the second quarter they were up 6%. Celanese also had a satisfactory second quarter. Even after allowing for losses suffered in 1968 from overseas operations which have since been deconsolidated, second-quarter earnings were up 69%, and sales up 15%, over the strike-affected second quarter of 1968. The first-quarter year-toyear earnings gain was only 11%. Rohm and Haas also did much better in the second quarter, posting a 12% year-to-year gain. This compared with a 9% drop in the first quarter when the dock strike limited the company's export shipments. Improved earnings from specialty chemicals, animal health and nutritional products, and drugs are behind Com-
Second-quarter 1969 brings mixed picture for chemical industry results
COMPANY
Second quarter Net Sales Net income (Millions of dollars) Change Change from from 1969 1968 1969 1968
First half Net sales Net income (Millions of dollars) Change Change from from 1969 1968 1969 1968
(Six months) 1969 1968
CHEMICALS Air Reduction Allied Chemical· American Cyanamid American Enka1 Celanese0 Diamond Shamrock Dow Chemical ' Du Pont W. R. Grace Hercules Koppers Monsanto Pennwalt Rohm and Haas Union Carbide
$126.8 363.9 286.8 57.2 318.2 143.1 464.3 932.0 482.1 189.0 137.3 504.9 107.8 122.4 733.1
+9% +7 +4 +8 +15 +5 +13 +6 -1 +5 +22 +8 +3 +10 +11
$ 5.1 19.4 23.5 4.2 19.4 8.8 45.5 101.0 15.4 12.7 5.6 36.2 5.6 11.3 50.2
+33 -4 0 +69 -14 +19 +4 -33 -10 +1 +12 -6 +12 +25
$ 246.5 688.8 557.3 113.6 617.2 266.3 877.3 1808.0 904.4 368.4 246.5 970.7 204.9 227.6 1414.0
27.5 3.0 17.5 3.1 3.4 15.5 6.4 8.5
+11 +15 +5 +35 +15 +13 +43 +19
620.2 69.1 284.4 131.3 131.7 379.4 103.6 189.1
+11% +7 +8 +8 +10 +3 +11 +5 +2 +7 +18 +8 +1 +6 +10
$ 10.7 34.2 48.6 8.9 37.8 16.4 79.5 193.0 22.1 24.0 8.5 69.6 9.5 19.6 95.6
-1% +19 +8 +9 +35 -10 +15 +4 -35 -5 +9 +16 -12 +2 +20
$0.96 1.22 1.09 1.11 2.68 0.84 2.63 4.04 1.08 1.21 1.70 2.08 1.04 3.36 1.58
$0.97 1.03 1.02 1.02 1.99 0.98 2.30 3.90 1.65 1.27 1.54 1.79 1.23 3.31 1.32
+11 +16 +18 +5 +24 +14 +31 +13
1.13 0.43 1.33 1.31 0.66 1.51 0.73 1.41
1.02 0.37 1.15 1.09 0.54 1.33 0.56 1.25
DRUGS Amer. Home Products Baxter Labs Eli Lilly Miles Labs Parke-Davis Chas. Pfizer Schering Upjohn
291.1 35.7 124.1 65.5 65.7 192.8 54.6 94.5
+11 +16 +10 +35 +15 +16 +26 +24
» Allied Chemical's first-half earnings benefited from a gain of $3.5 million from the sales of its Manhattan office building and $3 million from exchange of marketable securities for its own stock. In first-half 1968 the company gained $645,000 from such security exchanges. b American Enka data are for 24 weeks. 1969 net income for this period was increased a further $1.03 million, or 13 cents a share, by a change to
+11 +18 +14 +28 +11 +14 +21 +15
59.9 5.5 44.5 6.5 9.9 31.8 11.7 20.7
straight-line depreciation. c Celanese 1968 data are adjusted to account for deconsolidated operations. d Dow's 1969 income benefited from a gain of $3 million, or 10 cents per share, at the quarter and $7 million, or 23 cents per share, at the half from the sale of some small product lines.
JULY 28, 1969 C&EN 7
EPDM:
THE CHEMICAL WORLD THIS WEEK
mercial Solvents' better second-half showing when earnings were up 25% over the year-earlier period after dropping 4 5 % in the first quarter. Hercules did not do so well in the second quarter. Earnings fell 10% from the second quarter of last year, after showing a 2% year-to-year gain in die first quarter of this year. The company attributes much of the decline to unexpectedly heavy startup expenses and some softness in olefin fiber sales. The less ebullient growth in manmade fiber production and shipments this year is reflected in American Enka's returns. For the first quarter, earnings were up 17%. But in the second quarter they just equaled the year-earlier three-month period. Du Pont has also slipped into a pattern of very modest earnings growth level. After gaining 19% for all of 1968 over 1967, first-quarter earnings were up but 3 % and second-quarter earnings but 4%. W. R. Grace seems to be the major chemical company in the most earnings trouble this year. The poor fertilizer season, continued lower earnings on the Grace Line, and poor results in Peru have combined to drop earnings 35% behind the 1968 pace at the half.
LPG:
Renewed Interest Chemical company purchasing offices welcome suppliers of liquefied petroleum gases (ethane, propane, and butane) this summer more than at any time in the past year. New requirements and renewal of contracts for current use spur this fresh interest in LPG. Nearly all LPG going to make chemicals is consumed on the Gulf Coast. Most of this is cracked to make olefins—ethylene, propylene, and butadiene—in this order of production as chemicals. Reasons for the renewed interest in LPG are couched in careful words by company managements. But one thing is clear—demand for ethylene derivatives has increased rapidly this past spring, forcing plant operators to run their cracking units nearer to capacity than they had hoped. The results: better-than-expected reductions in top-heavy LPG inventories, thoughts toward adding new ethylene capacity sooner than anticipated, and efforts to get new contract commitments before prices increase. Du Pont confirms that its purchasing department has been making inquiries regarding new LPG supplies. It says 8 C&EN JULY 28, 1969
Goodrich Enters
Monsanto ethylene plant Another look at LPG
that this, however, is merely a routine market check for 25,000 42-gallon barrels per day, and part of a longrange study of its future raw materials supply position. Du Pont has no comment on possible use of this relatively large quantity of LPG. The company points out that sites for new plants or expansions at existing plants will not be firmly selected until raw materials are available. About 700 million pounds per year of ethylene can be made from 25,000 barrels per day of a typical ethanepropane mix (30-70) in cracking plants now operating. The yield of ethylene can be increased in varying degrees by changes in operating conditions or by use of a higher ethane content in the feed, with lower yields of propylene and other heavier olefins, as well as aromatics resulting. Du Pont has a relatively new ethylene unit at Orange, Tex., whose capacity is a nominal 750 million pounds per year. The company may be finding that its ethylene capacity now is more limited than it anticipated, and that it will need this much more capacity soon. Other major chemical companies who produce ethylene on the Gulf Coast also are rumored to be looking for more LPG. Some new LPG purchases will replace existing contracts as they expire, and some will go to fill needs caused by incremental expansions over recent years. More of an unknown than potential uses is how much of the interest in buying LPG comes from efforts by purchasers and potential purchasers of ethylene to keep the future price in the 3 to 3.5 cent-per-pound range, or lower. If merchant ethylene producers don't hold the price line, goes the thinking, then buyers will build captive capacity with the raw material now committed.
B. F. Goodrich has finally made its long-expected move into the EPDM ( ethylene-propylene-diene monomer ) market. After more than 10 years of research and development and five years of joint effort with Italy's Montecatini-Edison, the rubber company's chemical division has started marketing the highly resistant rubber. But BFG Chemical won't be producing EPDM until it can build facilities, construction plans for which are being made for the Orange, Tex., plant site of Ameripol, Inc., a wholly owned BFG subsidiary formerly called Goodrich-Gulf Chemicals Co. Until the company can produce its own EPDM, it will sell product made to BFG specifications by MonteEd. Company president T. B. Nantz says the company is "more than pleased with the quality of product which Montecatini is sending" and believes "their current production rate will be sufficient to meet our customers' demands until we get the Orange plant built and on stream." BFG Chemical has released no figures for its planned EPDM facilities at Orange. However, speaking last month to the Southwest Chemical Association, Edward J. Broadbeck, of Copolymer Rubber & Chemical, projected that BFG's then-rumored EPDM capacity would be 55 million pounds per year by 1972 (C&EN, June 23, page 2 6 ) . U.S. producers of EPDM are Copolymer, Du Pont, Enjay, and Uniroyal, with a combined annual capacity of 225 million pounds. Although
Enjay EPDM plant A demand increase
