n e w s of t h e w e e k CEO Charles O. Holliday Jr. said: "After four years of record earnings, we are disappointed by these results, but not discouraged for the future. In this environment, almost half of our business units successfully increased their earnings year overyear." The news was not bad for all chemical companies. FMC's earnings were up 80% in the fourth quarter to $36 million, The biggest drop in fourth-quarter and sales rose 4% to $1.12 billion. For earnings by far was at Union Carbide— the full year, earnings were up 19% to 84% to $24 million. Carbide said fourth- $185 million on sales of $4.38 billion, a quarter results were hurt by mainte- 3% increase over 1997. Chemicals were nance turnaround costs at its Taft, La., strong contributors to the company's and Texas City, Texas, plants and by ex- better fourth-quarter results, with the agcess costs incurred during the transition ricultural products segment trimming its to new information technology needed pretax loss to $3 million from $32 milto integrate the company's major work lion in fourth-quarter 1997. Specialty chemical pretax earnings were up 13% processes. to $18 million, and the industrial chemiCarbide Chairman and Chief Executive Officer William H. Joyce said the cal segment increased its contribution to company's consolidated results, as well pretax earnings by 16% to $29 million. as the results of its joint ventures and Thus, pretax profits for all the compapartnerships, also reflect continuing mar- ny's chemical businesses were up 386% ket weakness, particularly in Asia. Fur- to $44 million. When the full list of 30 chemical comthermore, he noted that prices for certain basic chemicals reached previous cy- panies is assembled, there likely won't clical low levels, while several businesses be many more bright spots such as FMC. experienced normal seasonal declines Many of the companies yet to report alin the fourth quarter. The huge fourth- ready have said that their earnings will quarter decline pulled Carbide's full-year be down from fourth-quarter 1997; securities analysts project lower earnings for earnings down 57% to $288 million. For industry leader DuPont, earnings others. There is no doubt that the fourth fell just 9% to $682 million on a 3% sales quarter was another in which lower pricrise to $6.1 billion. For the full year, earn- es and weak overseas economies comings fell 6% to $2.91 billion while sales bined to bash overall results. William Storck rose 3% to $24.8 billion. Chairman and
EARNINGS DOWN
More than half of 15 major chemical companies are reporting flat or declining sales and earnings
F
ourth-quarter earnings for many U.S. chemical companies simply cap a poor year. Fifteen of the 30 chemical companies regularly surveyed by C&EN have reported fourth-quarter and full-year results, and the picture isn't pretty. Of the 15 companies, eight recorded declines in earnings in the fourth quarter compared with the same three months of 1997, with one, Mississippi Chemical, slipping into the red. Earnings at three companies—Air Products & Chemicals, Cytec Industries, and Praxair—were essentially unchanged. Eleven of the companies had declines in sales for the quarter. Earnings are from continuing operations, excluding significant extraordinary and nonrecurring items. Results for the full year were only slightly better. Seven companies posted earnings declines, and nine had lower sales. For the group of 15 early reporters, total earnings were down 17% in the quarter on a 2% decline in sales. For the year, the earnings shortfall was 11% and sales were 2% less than they had been in 1997.
Minus signs dominate fourth-quarter chemical company results FULL-YEAR 1998
FOURTH-QUARTER 1998 Sales
Earnings3
($ millions)
Change from 1997
Profit margin"
Sales
1998
Earnings
Air Products Albermarle Cabot Crompton & Knowles Cytec Industries Dow Chemical
$1,274.6 205.4 409.0 401.8 352.4 4,441.0
$117.9 22.7 31.8 14.9 29.3 247.0
DuPont FMC H. B. Fuller Georgia Gulf Mississippi Chemical
6,099.0 1,115.9 361.1 196.3 94.8
682.0 36.0 11.6 12.6 -0.5
3 4 3 -15 -17
-9 80 -8 -39 def
11.2 3.2 3.2 6.4 nm
Morton International Praxair Rohm and Haas Union Carbide
640.6 1,197.0 884.0 1,289.0
48.4 107.0 75.0 24.0
-4 -1 -7 -5
-17 1 -8 -84
7.6 8.9 8.5 1.9
3% 0% -5 9 -6 1 -6 67 -2 0 -8 -31
9.2% 11.1 7.8 3.7 8.3 5.6
1997
Sales
Earnings3
Change from 1997 Earnings
1998
1997
4% -1 -3 -3 12 -8
9% 6 11 27 11 -21
9.9% 10.3 7.5 6.5 8.4 7.5
9.4% 9.6 6.6 5.0 8.5 8.8
Sales
($ millions)
Profit marginb
9.6% $ 4,930.8 820.9 9.6 1,621.3 7.2 2.1 1,796.1 1,444.5 8.1 18,441.0 7.4
$ 488.8 84.7 122.0 117.3 121.9 1,379.7
12.7 1.9 3.6 9.0 0.4
24,767.0 4,378r4 1,347.2 875.0 490.5
2,913.0 185.0 37.3 62.3 15.1
3 3 3 -9 -9
-6 19 -7 -18 -61
11.8 4.2 2.8 7.1 3.1
12.9 3.7 3.1 7.9 7.3
8.8 8.8 8.6 10.9
2,498.3 4,833.0 3,720.0 5,659.0
199.9 425.0 453.0 288.0
-1 2 -7 -13
-13 1 15 -57
8.0 8.8 12.2 5.1
9.1 8.9 9.8 10.4
a After-tax earnings from continuing operations excluding significant and nonrecurring items, b After-tax earnings as a percentage of sales, def = deficit, nm = not meaningful.
FEBRUARY 1, 1999 C&EN
7
