DOW
BUSINESS
FLAG DAY Dow
Chemical, with headquarters in Midland, Mich., leads the Top 50 U.S. ranking again this year.
TOP 50 U.S. CHEMICAL PRODUCERS The full effects of the recession are evident in
C&EN’S ANNUAL RANKING of U.S. chemical firms ALEXANDER H. TULLO, C&EN NORTHEAST NEWS BUREAU
IT IS OBVIOUS from C&EN’s latest survey
of the Top 50 U.S. chemical firms that the industry got creamed by the recession. The ranking is based on chemical company revenues for 2009, a year that began at the height of the recession and credit crunch. It was a horrible time for chemical makers. Customers panicked and stopped buying raw materials, opting instead to work off inventories and preserve cash. Chemical prices and volumes collapsed. The industry was in much better shape by the end of the year, but still not back to normal. “What a difference a year makes,” Dow Chemical’s chief executive officer, Andrew N. Liveris, told analysts in February. “As you recall, this time last year we were facing unprecedented demand destruction and, of course, steep declines in manufacturing activity across virtually all sectors.” Combined, the 50 companies in the survey saw a 21% sales decline versus the prior-year period, to $247.5 billion. The figure is the lowest total since C&EN’s 2004 sur-
vey, when the Top 50’s sales were $206.4 billion. The last year-over-year decline for the 50 firms was in the 2003 survey, when they posted a 2% sales decrease. Interestingly, aggregate operating profits for the 45 companies that reported them declined only 15%, to $24.0 billion. A couple of factors help explain the discrepancy: Many chemical companies slashed costs more severely last year than the recession cut into their top-line revenues. And low prices for raw material natural gas meant that some chemical makers enjoyed decent profitability during the year. Of the 50 companies surveyed, only four posted increases in sales, and each rise can be explained. Mosaic, number five on the list, posted a 5% jump in sales to $10.3 billion. But this is because the fertilizer maker’s fiscal year ended on May 31, 2009, and a lot of its results were booked before the full effects of the economic crisis kicked in. Its peers CF Industries and Terra Industries, which have calendar fiscal years, reported WWW.CEN-ONLINE.ORG
23
MAY 10, 2010
sales declines of 34% and 45%, respectively. Sigma-Aldrich reported a 6% increase in sales. Sigma-Aldrich both makes and buys the lab chemicals it distributes, but C&EN reports only on the portion the firm actually manufactures. That number increased from 60% in 2008 to 65% last year. Ashland reported a 42% increase in sales, to $3.6 billion, allowing it to leapfrog to the number 18 spot from 32 last year, the biggest jump in the survey. The explanation: Ashland acquired Hercules in November 2008 and enjoyed a full year of Hercules’ operations on its ledgers in 2009. Meanwhile, SK Capital came out of nowhere to make the list for the first time this year. The New York City-based private equity firm purchased Solutia’s Ascend nylon business in June and thus racked up $950 million in revenues during the year versus $150 million in 2008. BUT IN A DEEPLY recessionary year, a big
acquisition was no guarantee of increased sales. In April 2009, Dow acquired Rohm and Haas, which was number 10 on last year’s ranking with $8.4 billion in sales. However, the economic decline hit Dow so hard that it posted a 22% decrease in revenues to $44.9 billion. Dow still managed to once again head the survey by a wide margin over number two, ExxonMobil Chemical. In the meantime, the gap between ExxonMobil and number three DuPont closed considerably. ExxonMobil posted a 30% sales decline, to $26.8 billion, whereas
BUSINESS
TOP 50 U.S. CHEMICAL FIRMS
Revenues plummeted last year during the depths of the recession
RANK 2009 2008
COMPANY
CHEMICAL CHEMICAL OPERATING CHEMICAL OPERATING CHEMICAL SALES AS CHEMICAL PROFITS AS IDENTIFIABLE ASSETS AS RETURN SALES CHANGE % OF OPERATING CHANGE % OF TOTAL OPERATING CHEMICAL % OF ON ($ MILLIONS) FROM TOTAL PROFITSa FROM OPERATING PROFIT ASSETS TOTAL CHEMICAL b 2009 2008 SALES HEADQUARTERS ($ MILLIONS) 2008 PROFIT MARGIN ($ MILLIONS) ASSETS ASSETSc
1 2 3 4 5 6 7
1 2 3 4 9 6 5
Dow Chemical ExxonMobild DuPont PPG Industries Mosaice Praxairf Chevron Phillips
$44,875 26,847 25,960 11,390 10,298 8,956 8,406
-22.0% -30.1 -14.6 -18.3 4.9 -17.0 -33.5
100.0% 8.9 99.4 93.1 100.0 100.0 100.0
$1,741 2,309 2,474 1,225 2,445 2,762 707
94.1 100.0 100.0 100.0 100.0
Midland, Mich. Irving, Texas Wilmington, Del. Pittsburgh Plymouth, Minn. Danbury, Conn. The Woodlands, Texas Allentown, Pa. Salt Lake City Midland, Mich. Dallas Kingsport, Tenn.
-19.8% -21.9 -11.8 -19.4 -13.8 -4.5 76.3
100.0% 12.0 74.1 103.3 100.0 100.0 100.0
3.9% 8.6 9.5 10.8 23.7 30.8 8.4
8 9 10 11 12
8 7 14 11 12
13 14 15 16 17 18 19
17 18 15 13 19 32 16
20 21 22
27 25 23
Air Productsg Huntsman Corp. Dow Corning Celanese Eastman Chemical Lubrizol Monsantoh Honeywellf Hexion Nalco Ashlandg Occidental Petroleum FMC Corp. W.R. Grace Cytec Industries
7,766 7,763 5,093 5,082 5,047
-22.2 -24.0 -6.6 -25.5 -25.0
1,162 63 na 459 517
-23.4 -72.4 na -27.8 -5.8
96.5 100.0 na 100.0 100.0
15.0 0.8 na 9.0 10.2
4,586 4,427 4,144 4,030 3,747 3,570 3,225
-8.8 -11.4 -21.3 -33.9 -11.1 42.0 -36.9
100.0 37.8 13.4 100.0 100.0 44.0 20.9
Wickliffe, Ohio St. Louis Morristown, N.J. Columbus, Ohio Naperville, Ill. Covington, Ky. Los Angeles
868 1,352 605 174 500 115 389
80.4 -20.1 -16.1 -25.3 -14.5 85.5 -48.7
100.0 45.0 14.8 100.0 100.0 29.5 8.0
2,826 2,825 2,790
-9.3 -14.8 -23.4
100.0 100.0 100.0
468 283 73
-15.1 -5.7 -75.8
100.0 85.9
Philadelphia Columbia, Md. Woodland Park, N.J. Long Grove, Ill. Princeton, N.J.
23 24
20 30
25 26 27
24 21 22
28 29 30 31 32 33 34 35 36 37 38 39 40
26 31 33 38 36 35 28 29 40 34 45 42 37
41 42 43
41 44 46
44 45 46 47
48 — 49 47
CF Industries Rockwood Specialties Chemtura Ineos Nova Westlake Chemical Cabot Corp.g Momentive Albemarle ISP Solutia Ferro Corp.f Sunoco Terra Industries NewMarket Corp. Georgia Gulf Sigma-Aldrich Arch Chemicals Texas Petrochemicalsi Stepan H.B. Fullerj Kronos Worldwide Olin SK Capital Kraton Polymers Reichhold
2,608 2,545
-33.5 -11.2
777 75
2,541 2,374 2,326
-28.3 -38.9 -37.0
100.0 100.0 100.0
Philadelphia Channahon, Ill. Houston
2,243 2,084 2,005 1,700 1,667 1,658 1,616 1,581 1,530 1,499 1,396 1,392 1,377
-29.7 -21.1 -18.7 -11.5 -21.0 -26.2 -44.8 -45.3 -5.4 -34.4 5.7 -6.7 -31.7
100.0 100.0 100.0 100.0 100.0 100.0 5.2 100.0 100.0 75.3 65.0 100.0 100.0
1,276 1,235 1,142
-20.2 -11.3 -13.3
964 950 920 875
48 49 50
39 — 50
OM Group Arizona Chemical Innophos
872 768 667
$65,937 24,161 18,469 10,722 12,676 14,317 7,418
100.0% 10.4 98.5 75.3 100.0 100.0 100.0
2.6% 9.6 13.4 11.4 19.3 19.3 9.5
11,602 8,626 10,840 8,410 5,515
97.2 100.0 100.0 100.0 100.0
10.0 0.7 na 5.5 9.4
18.9 30.5 14.6 4.3 13.3 3.2 12.1
4,770 4,495 4,657 2,973 4,965 5,696 3,608
100.0 25.1 12.9 100.0 100.0 60.3 8.2
18.2 30.1 13.0 5.9 10.1 2.0 10.8
100.0 100.0 100.0
16.5 10.0 2.6
3,136 3,968 3,559
100.0 100.0 100.0
14.9 7.1 2.1
-32.8 nm
100.0 237.9
29.8 3.0
2,495 3,922
100.0 82.0
31.1 1.9
263 8 107
-25.5 nm nm
100.0 100.0 100.0
10.4 0.3 4.6
3,118 458 2,446
100.0 100.0 100.0
8.4 1.7 4.4
Boston Albany, N.Y. Richmond, Va. Wayne, N.J. St. Louis Cleveland Philadelphia Sioux City, Iowa Richmond, Va. Atlanta St. Louis Norwalk, Conn. Houston
-55 255 210 na 233 42 1 319 262 96 na 85 18
nm -15.9 -26.3 na 46.5 -60.6 -98.2 -59.7 125.3 282.5 na -24.2 -81.6
def 100.0 100.0 na 100.0 100.0 nm 100.0 100.0 nm na 100.0 100.0
def 12.2 10.5 na 14.0 2.5 0.1 20.2 17.1 6.4 na 6.1 1.3
2,676 3,307 2,772 na 3,266 1,526 1,222 1,600 1,025 974 na 1,211 710
100.0 100.0 100.0 na 100.0 100.0 10.3 100.0 100.0 60.6 na 100.0 100.0
def 7.7 7.6 na 7.1 2.8 0.1 19.9 25.6 9.9 na 7.0 2.5
100.0 100.0 100.0
Northfield, Ill. St. Paul, Minn. Dallas
105 107 -18
100.6 -2.2 nm
100.0 100.0 def
8.2 8.7 def
634 1,100 1,325
100.0 100.0 100.0
16.5 9.7 def
-24.4 533.3 -21.4 -32.1
62.9 100.0 100.0 100.0
125 na 75 na
-61.8 na -40.8 na
59.7 na 100.0 na
13.0 na 8.1 na
1,134 na 975 na
58.7 na 100.0 na
11.1 na 7.7 na
-49.8 -23.4 -28.7
100.0 100.0 100.0
Clayton, Mo. New York City Houston Research Triangle Park, N.C. Cleveland Jacksonville, Fla. Cranbury, N.J.
45 42 127
-76.1 1.9 -57.6
100.0 100.0 100.0
5.1 5.5 19.0
1,444 618 663
100.0 100.0 100.0
3.1 6.8 19.2
a Operating profit is sales less administrative expenses and cost of sales. b Operating profit as a percentage of sales. c Chemical operating profit as a percentage of identifiable assets. d Profits and profitability ratios are after tax. e Fiscal year ended May 31. f Sales include a significant amount of nonchemical products. g Fiscal year ended Sept. 30. h Fiscal year ended Aug. 31. i Fiscal year ended June 30. j Fiscal year ended Nov. 28. def = deficit. na = not available. nm = not meaningful.
WWW.CEN-ONLINE.ORG
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MAY 10, 2010
DuPont posted only a 15% decrease, to $26.0 billion. More than $8 billion separated the companies in last year’s survey. ExxonMobil deals heavily in commodity petrochemicals, products that are more prone to price fluctuations than DuPont’s more specialized product line. A newcomer to the top of the list is Dow Corning, which came in at number 10. The maker of silicon-based materials posted a mere 7% decline in sales. Its results might as well be considered a gain compared with the 21% decline the rest of the industry suffered. Of the 50 companies, the largest decline was at OM Group, which lost half of its sales. The company’s cobalt- and nickelbased chemicals are sensitive to fluctuations in metals prices. With $872 million in sales, OM ranks number 48. It was 39 in C&EN’s previous survey. Testifying to the extent of the industrywide sales decline, OM was one of seven companies with less than $1 billion in sales. Last year’s ranking had only one, phosphorus chemicals maker Innophos. In addition to Rohm and Haas, one firm, Tronox, dropped off the list. The bankrupt titanium dioxide maker ranked 43 in last year’s survey but has since shrunk in size. And Arizona Chemical, the former pine chemicals arm of International Paper, joins SK Capital as a newcomer on the list. Its parent, private equity firm Rhône Capital, is launching an initial public offering for the company, and thus its financial records were published recently in a prospectus, putting them within reach of C&EN’s survey. A number of large firms are not on the list because their chemical results are not disclosed publicly. The biggest of these is probably Koch Industries. Other companies in this category are 3M, Procter & Gamble, Baker Hughes’ Petrolite division, PQ Corp., and Goodyear Tire & Rubber. Some of these firms made the list in previous years when they disclosed their chemical sales.
traded shares enjoyed a 65% increase in their stock market values to $201 billion. Eleven companies, including Dow, saw their market capitalization more than double. Only one company, chlorine maker Olin, lost market value during the year. Not all of this was because of increases in stock prices. Because of the downturn, a number of companies issued more shares or
sold off treasury stock to raise money, thereby diluting the interests of existing shareholders. For example, Georgia Gulf posted a nearly 1,500% gain in market capitalization. But that is because the company, which was staring down bankruptcy last year, worked out a deal with creditors to swap debt for equity. Because of the dilution, an investment of $10,000 in Georgia Gulf shares on Dec. 31,
MERCK CATALYSIS SYMPOSIUM PRINCETON UNIVERSITY
SPEAKERS
RYOJI NOYORI
Nagoya University– Nagoya, Japan, Department of Chemistry and Research Center for Materials Science
DEPARTMENT OF CHEMISTRY
MAY 20, 2010
C&EN ALSO ranks the publicly traded
FRANCES HAMILTON ARNOLD
California Institute of Technology, Division of Chemistry and Chemical Engineering
LOCATION: ALEXANDER HALL, RICHARDSON AUDITORIUM, PRINCETON, NEW JERSEY To attend this event, registration is required at https://sites.google.com/site/ princetonorgo/
JUSTIN DU BOIS
Stanford University, Department of Chemistry
Host: Professor David W. C. MacMillan, Princeton University, Department of Chemistry
members of the Top 50 by market capitalization, a metric that offers a vastly different picture of how the industry fared last year. Even though revenues slumped and stayed down for most of the year, values of companies on stock markets rebounded strongly in 2009. An investment in the U.S. chemical industry early in 2009 would have earned exceptional returns by the end of the year. As a group, the 32 companies with publicly
For more information, please contact Caroline Phillips,
[email protected], 609-258-2254.
SCOTT J. MILLER Yale University, Department of Chemistry
WWW.CEN-ONLINE.ORG
25
MAY 10, 2010
BUSINESS
A YEAR TO FORGET
Only two foreign firms posted an increase in U.S. chemical sales in 2009 RANK 2009 2008
COMPANY
U.S. CHEMICAL SALES ($ MILLIONS) 2009
1 2 3 4 5
1 — 3 4 6
BASF LyondellBasell Agriuma Total AkzoNobel
$12,988 10,530 7,146 4,515 4,412
6 7 8 9 10
5 8 12 9 11
Bayer Air Liquide Shin-Etsu Chemicalb Evonik Industries Syngenta
4,271 3,169 3,048 2,644 2,567
11 12 13 14 15
10 14 15 17 7
Nova Chemicals Linde DICb Sasolc PotashCorp.
16 17 18 19 20
— 16 18 21 —
21 22 23 24 25
13 20 24 — 23
CHANGE FROM 2008
-21.9% -35.8 -2.1 -10.7 -8.6
U.S. CHEMICAL SALES AS % OF TOTAL U.S. SALES
COUNTRY
100.0% 63.6 100.0 34.1 100.0
Germany Netherlands Canada France Netherlands
-12.5 -14.5 -7.6 -17.7 -4.7
39.8 100.0 100.0 100.0 68.9
Germany France Japan Germany Switzerland
2,017 2,007 1,743 1,611 1,559
-39.8 -13.1 -16.6 4.8 -47.9
100.0 85.3 100.0 100.0 100.0
Arkema DSM Solvay Alfa Group Yara
1,483 1,378 1,330 1,306 1,226
-14.1 -16.5 -7.4 12.5 -22.0
Lanxess Rhodia Israel Chemical Lonza Wacker Chemie
1,088 1,066 875 865 835
-27.3 -17.7 -12.4 -11.2 -18.6
Chemical firms ended the year a lot better off than they started it RANK 2009 2008
1
4
2 3 4 5
1 3 2 6
6
7
7
8
Canada Germany Japan South Africa Canada
8 9 10
10 14 11
11
12
100.0 100.0 46.7 58.0 100.0
France Netherlands Belgium Mexico Norway
12 13 14 15
9 16 13 15
16
21
100.0 100.0 100.0 100.0 100.0
Germany France Israel Switzerland Germany
17 18
29 20
19
22
20
27
21 22
19 18
23 24 25 26 27
— 17 23 25 26
28
24
29
32
30 31
28 33
32
30
NOTE: Figures from companies that report in native currencies were converted to dollars at average annual exchange rates from the Federal Reserve Board. a Sales include a significant amount of nonchemical products. b Fiscal year ended March 31. c Fiscal year ended June 30.
2008, would have been worth about $6,500 at the close of 2009. During the year, Dow took the market capitalization lead from DuPont. The rest of the Top 50 moved largely in tandem, though there were a few big gainers. Celanese, which saw a 160% market cap gain to $4.6 billion, jumped from number 14 to number nine. W.R. Grace saw a 325% gain to $1.8 billion, catapulting it from 29 to 17. C&EN also ranks foreign companies by their U.S. or North American revenues, and once again, BASF tops that list. A newcomer is LyondellBasell Industries, which has its headquarters in the Netherlands and recently emerged from bankruptcy. Other companies that are new to the foreign ranking are France’s Arkema, which published results in time to be included, Norwegian fertilizer maker Yara, and Swiss fine chemicals firm Lonza. A few companies have dropped off the foreign list. Because of a corporate reorganization, Shell no longer breaks out its chemi-
MARKET CAPITALIZATION
cal sales. Ciba was acquired by BASF. And, shrinkage in U.S. revenues knocked Clariant and Cognis off the survey this year. UNDER NORMAL circumstances, acquisi-
tions leave a big mark on the Top 50. That wasn’t the case for the current survey, but Paul de Janosi, managing director and global head of private equity at Celerant Consulting, expects 2010 to bring a hefty increase in mergers and acquisitions. “We are probably going to surpass all of last year by the middle of this year,” he says. Overall, de Janosi expects 800 to 900 transactions this year, a 40–50% increase over 2009. However, most of them will be smaller deals valued in the millions, not billions, of dollars. Now that the chemical industry has put the economic downturn behind it, companies are “replatforming” their businesses to focus on new markets and geographies, de Janosi explains. “The companies that have been successful in the past two years have been focusing on cost management WWW.CEN-ONLINE.ORG
26
MAY 10, 2010
MARKET CAP. CHANGE ($ MILLIONS) FROM COMPANY 2009 2008
Dow Chemical DuPont Mosaic Praxair Air Products PPG Industries SigmaAldrich Lubrizol Celanese CF Industries Eastman Chemical FMC Corp. Nalco Albemarle Terra Industries Huntsman Corp. W.R. Grace Cytec Industries Rockwood Specialties NewMarket Corp. Cabot Corp. Westlake Chemical Solutia Olin H.B. Fuller OM Group Kronos Worldwide Arch Chemicals Ferro Corp. Stepan Georgia Gulf Innophos
$31,780
127.9%
30,431 26,592 24,615 17,128
33.3 72.9 35.1 62.7
9,700
39.2
6,152
19.3
4,990 4,635 4,412
103.7 159.9 85.4
4,367
90.0
4,043 3,525 3,328 3,213
24.7 118.1 64.0 94.1
2,643
228.9
1,833 1,774
325.2 77.5
1,748
118.4
1,745
228.8
1,713 1,645
71.2 53.7
1,542 1,379 1,108 951 796
263.3 -1.3 42.1 49.2 39.5
772
19.4
709
125.1
642 586
42.2 1,464.0
489
17.1
NOTE: Based on share prices on Dec. 31, 2008, and Dec. 31, 2009. These 32 companies are firms on the Top 50 list that generate more than half of their revenues through chemical manufacturing.
and streamlining their existing businesses as much as possible,” he says. Now they are shifting emphasis to market opportunities. One example of such replatforming is Eastman Chemical. The company is seeking a buyer for its polyethylene terephthalate business (C&EN, May 3, page 11). At the
ME THO DOLOGY
Compiling The 50 C&EN ranks U.S. chemical producers by sales of chemicals and allied products except pharmaceuticals. Ranking the companies by chemical sales is the only way that privately held companies and some diversified producers can be included. C&EN also ranks U.S. firms on the basis of market capitalization. The ranking includes 32 companies that have had listings on major U.S. stock exchanges over a comparable year-over-year period and that generate a majority of their revenues via chemical manufacturing.
same time, it recently acquired non-phthalate plasticizer maker Genovique Specialties from Arsenal Capital Partners. De Janosi says private equity firms will be active this year. Because financing hasn’t been available for them to complete
Because companies don’t necessarily report chemical and nonchemical sales separately, nonchemical products often creep in. For instance, DuPont’s agricultural and nutrition segment includes sales of both seeds and agrochemicals. Monsanto, on the other hand, reports seeds and agrochemicals separately. C&EN does not normally restate prioryear results other than to update foreign company results for current exchange rates or, occasionally, for changes in accounting procedures that otherwise would prevent year-over-year company comparisons. Neither does C&EN routinely restate prior-year rankings. In the ranking of foreign-owned com-
panies, C&EN uses sales administered by the firms’ U.S. headquarters. These figures are as close to U.S. sales as possible, but companies don’t post regional sales consistently. For example, Israel Chemical provides sales for the U.S., whereas BASF reports them for North America. A global ranking of chemical producers is scheduled to appear in the July 26 issue of C&EN. To compile the survey, C&EN uses, for the most part, official company documents such as annual reports and 10-K filings with the Securities & Exchange Commission. For privately held and some foreign-owned companies, C&EN also interviews companies directly.
transactions, they have a lot of cash on their hands. They also can move faster and have a higher tolerance for risk than strategic buyers in the chemical industry. Past activity by private equity players created leading firms such as Hexion
Specialty Chemicals, Nalco, Celanese, Rockwood Specialties, and Innophos. If de Janosi’s prediction holds true, more firms assembled by financial players will enter the ranks of the Top 50 in the year ahead. ■
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Cr ystallography
think forward WWW.CEN-ONLINE.ORG
27
MAY 10, 2010
