CHECKOFF NEW PLANTS • Polyols—BASF Wyandotte has under way a doubling of capacity to an unspecified level at Wash ington, N.J,; to be completed in mid- to late 1977, new capacity will lead to increased production of specialty organic chemicals, in cluding a number of surfactants. • Research and d e v e l o p m e n t Industrial Bio-Test Laborato ries plans new 19,500-sq-ft build ing at Decatur, 111., to be used for chronic inhalation toxicity studies; completion expected by May 1976. • Rubber chemicals—Uniroyal plans multimillion-dollar expan sion of antiozonants in Geismar, La., to be completed in 1978. • Vinyl acetate—Celanese plans capacity addition of about 175 million lb per year at Bay City, Tex., to reach a new capacity of more than 400 million lb in early 1978. The addition will boost total company vinyl acetate capacity from 675 million lb to about 850 million lb.
PLANTS COMPLETED m Alkyl amines—Virginia Chemi cals has completed and is operat ing facility of unspecified size in Bucks, Ala. (near Mobile), m Caustic soda—New unit by PPG Industries for spherical-form dry caustic soda is in full opera tion in Natrium, W.Va.; total PPG capacity at this plant and another unit at Lake Charles, La., for spherical dry caustic is more than 120,000 tons per year. • Hydrocarbon product storage —Shell Oil has completed a multimillion-dollar expansion pro gram adding two underground salt dome cavities at its Sorrento stor age facility in southern Louisiana; these two, plus two old cavities, give a total storage capacity of 1 million bbl of ethane, 1 million bbl of butane, 900,000 bbl of ethylene, and 650,000 bbl of propane. • Phosgene—Chemetron has com pleted a new plant for phosgene and derivatives at La Porte, Tex. New phosgene capacity is 50 mil lion lb per year; older phosgene unit of 17 million lb capacity at same site is now on standby.
12
C&EN Dec. 22, 1975
Fourth quarter brings strong recovery The fourth quarter in the chemical in dustry is living up to the nearly uni versal prediction of having a profits upswing from both the third quarter and from the fourth quarter of 1974. Some of the first hard numbers for the current quarter emerged earlier this month from American Cyanamid, Hercules, and Monsanto. All three bear out the general forecast. Beating the weak performance of fourth-quarter 1974 will not prove too much for the chemical industry, al though this would be the first year-toyear gain in four quarters. On the other hand, an improvement over the third quarter of 1975 would show considerable strength, since the fourth quarter usually brings a seasonal slump in chemical after-tax profits. Over the past five years, this drop has averaged 17%. The three companies turn out to be a neatly balanced group. The biggest, Monsanto, which all year has per formed close to the average for the chemical industry, predicts its fourthquarter net income will be up more than 20% from the third quarter and up more than 40% from fourth-quarter 1974. These percentages are derived from the company's forecast that net income for all of 1975 will be down just 9 to 11% from 1974 to a range of $288 million to $295 million. Sales are heading for a 3% increase to $3.6 billion. Monsanto's strong surge in the cur rent quarter could be a hint of betterthan-expected performance for the basic chemical industry as a whole. A robust fourth quarter for 1975 would soften considerably the recessionary blow this year to earnings. Monsanto chairman John W. Hanley notes, "This year's financial results are the second highest in the company's history and were ac complished despite the worst economic recession in many years." In general, chemical companies' profitability in 1975 has not suffered nearly as much as in past recessions (C&EN, Nov. 3, page 10). A chemical company whose profit ability has been hardly nicked this year is American Cyanamid. Cyanamid's balanced operations are giving another year of earnings strongly buffered from the business cycle. An estimate from company president James G. Affleck to San Francisco security analysts puts earnings this year about the same as in 1974 at $147 million. Sales are rising to a new high of about $1.9 billion, about 8% ahead of 1974. For the fourth quarter, Affleck expects higher earnings than in fourth-quarter 1974. Figured from the company's fullyear 1975 estimated earnings, the fourth-quarter gain will be slight. How ever, the fourth-quarter figure is ex pected to be nearly 20% more than thirdquarter earnings. On the other side of the cyclical
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these products were about $16 million in the red. By contrast, in Hercules' so-called established product lines, annualized pretax profits are still close to their lows reached in the second quarter. A particular problem has been massive customer inventories in the company's important pine-based chemicals (C&EN, Oct. 13, page 11). Hercules' overall pretax profit margin has moved up sharply and is now about 10% on sales. Brown says the company's normal profit margin is 13 to 14%. For next year, Brown is not specific but predicts better performance than in 1975. "Assuming continuing recovery of the nation's economy, we look for 1976 to be a record sales year. As we continue our job of restoring profit margins to their traditional levels during 1976, I believe we will be pleased with next year's earnings." At Cyanamid, the 1976 forecast from president Affleck is for another balanced 12 months. "At this time, it appears t h a t 1976 should be an improving year for our chemical, consumer, and medical businesses." The chemical and consumer areas had sizable earnings drops in 1975, and the medical segment stayed even with 1974. "However," Affleck continues, "our agricultural business could be down significantly from this year's record level as sales and earnings will be affected by lower average fertilizer prices. If fertilizer prices do not fall much below their current levels, we would expect 1976 earnings to be close to this year's." In 1975, agricultural chemical earnings account for more than 60% of the company's total earnings. Monsanto's important agricultural chemicals are weighted heavily toward herbicides, an area that does not have fertilizer's price problems. The company's herbicide season is off to a flying start with some of these products' high profits shifted into the fourth quarter of 1975. This boost is helping to offset a dropoff in fibers and plastics volume in the fourth quarter after strong recovery in these two areas earlier in the year. Overall, chairman Hanley is optimistic about Monsanto's chances in 1976. "Assuming continued strength in the U.S. economy and a midyear turnaround in European economies, 1976 should be another strong year for Monsanto." William F. Fallwell, C&EN New York
Chemical capital spending There is an error in the table on page 15 of the Dec. 15 issue of C&EN. The headings on the second and third columns of numbers have been reversed. The second column really confirms that actual capital spending by chemical companies in 1975 will fall slightly short of the original spending plans for the year, which are given in the third column.
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