News of the Week
FIRST QUARTER CHEMICAL EARNINGS SLUGGISH The first quarter of 1981 is shaping up for the chemical industry as a period of waiting, at best. It now looks as though earnings for U.S. chemical companies probably will be flat or perhaps down from their levels of a year ago. Most of the chemical companies and companies with chemical operations that so far have reported or predicted first-quarter earnings have said that their profits for the three month period will be lower than in the same period a year ago. Business overseas for these companies particularly seemed to be hurting. But also affecting earnings in the first quarter was advanced buying that took place at the end of the fourth quarter of 1980 in anticipation of January price increases. This advance buying swelled profits in last year's final period, but reduced demand in this year's first quarter. At its annual meeting last week Celanese reported first-quarter earnings of $36 million on sales of $911 million. Earnings for the company were unchanged from last year's first quarter but sales were 8% ahead. Celanese claims that in the first quarter its U.S. business was good, but its foreign business suffered. Chairman John D. Macomber told the meeting of stockholders in Dallas, "For the quarter overall, our U.S. chemicals, U.S. cellulosics, and plastics and specialties businesses all posted good results, and our domestic polyester fibers business continued profitable." But, Macomber continued, "We were hurt by weakness in some overseas fibers markets and by higher worldwide costs for raw materials." U.S. fiber earnings at Celanese increased 70% from last year's first quarter to 68 cents a share, and plastics and specialties earnings climbed 118% to 37 cents a share. Although continuing to be profitable, Celanese's U.S. chemical operations had an earnings decline of 6% to $1.37 per share in the first quarter. However, non-U.S. chemicals and fibers operations at Celanese showed a 17 cent-per-share loss for the first quarter, compared to a profit of 36 cents a share in the first three months last year. In the U.S., Celanese's earnings 4
C&EN April 13, 1981
Macomber: Celanese hurt overseas
show the strengthening of the polyester market. U.S. polyester earnings in the first quarter were 7 cents a share following a loss of 9 cents a share in the first quarter last year. Other chemical companies or companies with significant chemical operations say that first-quarter earnings will fall. B. F. Goodrich chairman John D. Ong says that the
company may report higher firstquarter net income, but earnings from operations will be substantially lower than last year. Goodrich will show a nonrecurring gain of $17.9 million from the exchange of debentures for a new series of convertible preferred stock. So while total earnings including the nonrecurring items may be above the $20.3 million earned in the first quarter last year, Ong says that it appears at this point that earnings "will not exceed the $22.7 million reported in the 1980 fourth quarter." This would mean that net earnings excluding the nonrecurring items would not be more than $4.8 million, which would represent a 75% decrease from the first quarter last year. Other companies predicting lower first-quarter earnings include Akzona, Goodyear, and Sun Co. An exception to lower earnings reports seems to be Olin, which says that it may have a 25% increase in earnings in the first quarter on a sales increase of less than 10%. In the first quarter of 1980, Olin's earnings amounted to $22.1 million on sales of more than $475 million. Olin attributes its improved earnings to its chemicals business and to improved operations. D
CMA proposes modest c *an air law changes Possibly because it is not so affected as some other industries by rules issued under the Clean Air Act, the chemical industry has been slow to make its views known on the law, which is now up for reauthorization. Last week, however, the Chemical Manufacturers Association circulated its modest recommendations for changes to the 11-year-old law, last amended in 1977. Among these was business's universal recommendation that the "increment accounting" system set up under the Prevention of Significant Deterioration (PSD) program to protect the air in so-called "clean-air" areas of the country be streamlined. The trade association claims that strict accounting need take place only in wilderness and national park areas—so-called Class I areas—and that the requirement for best available control technology and adherence to air quality standards
will protect the air in other clean-air areas (those designated Class II and III). Streamlining the PSD program would simplify permitting processes and would eliminate "superfluous and costly delays" in developing projects to meet the country's energy needs and stimulate the U.S. economy, CMA contends. These projects also would be encouraged by eliminating what CMA calls "emission control inequities." New facilities sited either in clean-air or in dirty-air (nonattainment) areas should be required to use best available control technology, CMA says. Facilities locating in nonattainment areas are now required to install "lowest achievable emission rate." The trade association also calls for flexibility in meeting deadlines for state implementation plans, and for returning more control to the states
