NEWS OF THE WEEK
MIXED EARNINGS IN FOURTH QUARTER PROFITS: Large chemical firms manage to make money despite some weak market segments
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N THE FOURTH QUARTER of 2012, chemical firms
reported sales and earnings that varied widely across sectors. The diverse results occurred against a backdrop of lingering slowness in the global economy. Overall, however, executives said that careful management of operations allowed their firms to stay profitable. At DuPont, the contrast among sectors was stark. “We had double-digit earnings growth in agriculture and performance materials, but all these accomplishments were not enough to overcome the sharper than expected declines in demand for two of our product groups, specifically titanium dioxide and photovoltaic materials,” explained Ellen J. Kullman, DuPont’s CEO, in an earnings conference call. DuPont recorded $110 million in earnings, a drop of more than 55% compared with the fourth quarter of 2011. Strong demand from Latin America for DuPont’s agricultural products made that segment a standout— with sales of $1.5 billion, up 18%. Adjusted earnings per share of 12 cents was 4 cents above consensus estimates. Similar to DuPont, Dow saw sales in its agricultural sciences business soar 17% compared with the year-ago quarter. But overall flat volumes and weak pricing eroded sales by 1.3% for the quarter. The 26.7% increase in earnings was driven primarily by a $413 million decline in the costs of purchased feedstock and energy. Polysilicon woes, caused by an oversupply in the solar sector, also hurt Dow as it saw much lower returns from its equity share in polysilicon maker Dow Corning. Dow’s
adjusted earnings per share of 33 cents for the quarter missed consensus expectations by a penny. In a conference call with analysts, Dow CEO Andrew N. Liveris reflected on 2012. “It was a challenging year, but we controlled the controllable.” He singled out the company’s performance packaging business as having had a strong quarter and year, with sales increases in North America and Latin America. The return of demand in North America had a larger, positive impact at PPG Industries. U.S. architectural coatings, automotive, and packaging markets led volume growth in performance and industrial coatings. As a result, PPG saw earnings of $238 million, an increase of more than 10% compared with the fourth quarter of 2011.
FOURTH-QUARTER 2012 RESULTS Chemical industry adjusted to slow-growth environment SALES EARNINGSa ($ MILLIONS)
Air Products Albemarle Ashland Celanese Dow Chemical DuPont PPG Industries Praxair
$2,562 688 1,869 1,501 13,917 7,325 3,648 2,799
$277 105 90 108 474 110 238 414
CHANGES FROM 2011 SALES EARNINGS
10.3% -2.7 -3.2 -7.0 -1.3 -0.2 3.7 0.1
2.6% 2.9 -5.3 17.4 26.7 -55.3 10.2 0.0
PROFIT MARGINb 2012 2011
10.8% 15.3 4.8 7.2 3.4 1.5 6.5 14.8
11.6% 14.4 4.9 5.7 2.7 3.4 6.1 14.8
a After-tax earnings from continuing operations, excluding significant extraordinary and nonrecurring items. b After-tax earnings as a percentage of sales.
Celanese saw an even split in results for its four main business segments. Its advanced engineering materials had a strong sales and earnings quarter despite poor results in Europe and normal seasonality. Consumer specialties also posted increased earnings, while industrial specialties and acetyl intermediates segments posted lower sales and earnings. Overall, partly on the strength of new advanced-materials products, the firm raised earnings 17.4% despite 7.0% lower sales.— MELODY BOMGARDNER
PESTICIDES Child safety worries push EPA to initiate ban on 12 d-CON rodent poisons To stop the accidental exposure of some 10,000 children a year to mouse and rat poison, EPA is moving to ban a dozen products sold as d-CON. EPA said last week that d-CON maker Reckitt Benckiser is the only company that refuses to adopt measures to protect children and wildlife from all rodent control products it sells for consumer use. “Moving forward to ban these products will prevent completely avoidable risks to children,” says James J. Jones, acting assistant administrator for EPA’s Office of Chemical Safety & Pollution Prevention.
The affected d-CON products such as d-CON Ready Mixed are sold as pellets or powder and are not in tamper-resistant bait stations, according to the agency. As of 2011, EPA required rodent control products sold to consumers to be enclosed in bait stations. The agency says it has received no reports of children exposed to rat and mouse poisons produced by companies that have complied with this safety standard. In addition, eight of the d-CON products targeted in the ban contain brodifacoum or difethialone. Since 2011, EPA
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has prohibited sale of consumer products containing these pesticides because of their toxicity to wildlife. To date, the company is not in compliance with the law. England-based Reckitt Benckiser did not respond to calls for comment by C&EN’s deadline. Unless the company requests an administrative hearing to challenge EPA’s move, the agency in early March will cancel the federal pesticide registration for the 12 d-CON products, rendering them illegal to sell. Other d-CON products on the market are not affected.—CHERYL HOGUE
