BUSINESS
considered a disappointment, it should be noted that the 2011 total was a record. Profits also fell. The 42 chemical firms in the ranking that report operating profits together posted a 3.2% decrease to $38.9 billion. As was the case for sales, the comparison year of 2011 was a record for Financial results reflect the economic challenges chemical company profitability. of 2012, but stock values point to OPTIMISM Only one firm, Ferro Corp., reported a ALEXANDER H. TULLO, C&EN NORTHEAST NEWS BUREAU loss. Ferro is a company in turmoil. Its CEO resigned last year. Activist shareholders are trying to get new directors elected to its C&EN’S LATEST SURVEY of the Top 50 from 2011. Twenty-six of the companies— board. And it is fending off a hostile takeU.S. chemical companies reveals a chemiand seven of the top 10—posted sales over attempt by plastics compounding firm cal industry that, although healthy, is in no declines. Although the sales figure can be A. Schulman. better condition than it was a Mergers and acquisitions year ago. Both sales and profits had a big impact on the Top 50 MARKET CAPITALIZATION for the largest chemical makers ranking this year. Four firms DuPont slipped but held on to the lead were down slightly in 2012, the that previously appeared didn’t for the third consecutive year period of record for the survey. make the list this year because of However, chemical company acquisitions. MARKET CAP stock prices rose strongly over TPC Group, number 30 in RANK ($ MILLIONS) CHANGE FROM the course of the year. Investors 2012, was acquired by the pri2012 2011 COMPANY 2012 2011 1 1 DuPont $41,966 -1.0% are apparently sending a signal: vate equity firms SK Capital 2 2 Dow Chemical 38,903 14.2 The sluggishness experienced Partners and First Reserve and 3 3 Praxair 32,419 1.6 by the global economy in 2012 no longer reports its results. 4 4 Mosaic 24,107 12.4 was only temporary, and many Solutia, number 34 last year, 5 6 PPG Industries 20,790 63.9 of the problems that worried was purchased by tenth-ranked 6 5 Air Products 17,443 -2.8 investors early in the year—inEastman Chemical. Titanium 7 7 CF Industries 12,799 35.0 cluding a European recession dioxide maker Tronox, number 8 11 Eastman Chemical 10,473 95.9 9 8 Sigma-Aldrich 8,830 16.8 and softness in China—will be 37 in last year’s survey, merged 10 10 FMC Corp. 8,058 34.2 overcome. with the mineral sands business 11 9 Celanese 7,107 2.6 In his letter to shareholders, of Exxaro Resources and now 12 13 Ashland 6,352 41.9 Andrew N. Liveris, chief execuhas its headquarters in Aus13 12 Albemarle 5,522 20.7 tive officer of Dow Chemical, tralia. Sunoco, number 45 last 14 16 Westlake Chemical 5,305 98.3 noted the challenges he faced year, exited chemicals through 15 14 W.R. Grace 5,083 49.8 16 15 Rockwood Specialties 3,883 28.2 navigating his firm, again deals such as the sale of its poly17 18 Huntsman Corp. 3,789 60.8 number one in C&EN’s rankpropylene business to Brazil’s 18 17 NewMarket Corp. 3,513 32.4 ing, through a difficult year. Braskem. 19 21 Cytec Industries 3,090 52.1 “The world continued its rocky 20 22 Cabot Corp. 2,547 25.8 recovery in 2012, with volatilOTHER TRANSACTIONS 21 20 Kronos Worldwide 2,260 8.1 ity and uncertainty proving to made chemical firms move up 22 25 Chemtura 2,083 90.8 be the new normal,” he wrote. and down the ranking. Ashland 23 24 H.B. Fuller 1,738 51.9 24 23 Olin 1,732 10.0 “Persistent weakness in Europe jumped to 14, from 20 the year 25 30 Axiall 1,424 113.7 was a continued drag on global before, thanks to a full year 26 27 Stepan 1,222 49.4 [economic] growth, while draof regular operations after its 27 26 Innophos 1,014 -3.4 matic declines in China, Brazil, 2011 purchase of International 28 32 Innospec 804 24.5 and other emerging geographies Specialty Products. Cytec In29 29 Koppers 786 11.0 introduced new risks to a susdustries dropped to 35, from 26, 30 31 Kraton Polymers 776 19.1 31 28 OM Group 708 -0.8 tained recovery.” largely because of the divesti32 25 Ferro Corp. 390 -14.5 U.S. chemical companies ture of its coatings resins busi33 35 Omnova 329 56.1 were pulled down by these ness to the private equity firm NOTE: Based on share prices on Dec. 31, 2012 and Dec. 30, 2011. These 33 companies factors, but not sharply. ComAdvent International. are firms on the Top 50 list that generate more than half of their revenues through bined sales for the Top 50 were Mergers and acquisitions chemical manufacturing. $318.7 billion, a 3.1% decline activity also influenced C&EN’s
TOP 50 U.S. CHEMICAL PRODUCERS
Investors are apparently sending a signal: The sluggishness experienced by the global economy in 2012 was only temporary. CEN.ACS.ORG
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TOP 50 U.S. CHEMICAL FIRMS Revenues declined at most large companies because of economic woes in 2012
RANK 2012 2011
COMPANY
1 2 3 4 5
1 2 3 5 4
Dow Chemical ExxonMobil DuPontd PPG Industries Chevron Phillips
6 7 8 9 10
6 7 8 9 11
11 12 13 14 15 16 17 18 19 20
10 12 17 20 13 15 14 16 19 18
21 22 23
22 23 21
24 25 26
25 24 27
27 28 29 30 31
29 31 28 33 35
32 33 34
39 36 32
Praxaird Huntsman Corp. Mosaice Air Productsf Eastman Chemical Momentive Celanese Honeywelld Ashlandf Dow Corning CF Industries Lubrizol Styron Ecolab Occidental Petroleum FMC Corp. Monsantog Westlake Chemical Cabot Corp.f W.R. Grace Rockwood Specialties Albemarle Axiall Chemtura NewMarket Corp. Kronos Worldwide H.B. Fullerh Stepan Ferro Corp.d
35
26
36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
CHEMICAL CHEMICAL OPERATING CHEMICAL OPERATING CHEMICAL SALES AS CHEMICAL PROFITS AS IDENTIFIABLE ASSETS RETURN SALES CHANGE % OF OPERATING CHANGE % OF TOTAL OPERATING CHEMICAL AS % OF ON a ($ MILLIONS) FROM TOTAL PROFITS FROM OPERATING PROFIT ASSETS TOTAL CHEMICAL b HEADQUARTERS ($ MILLIONS) 2012 2011 SALES 2011 PROFITS MARGIN ($ MILLIONS) ASSETS ASSETSc
$56,786 38,726 30,216 14,168 13,307
-5.3% -7.7 -13.1 2.5 -4.5
100.0% 8.5 86.8 93.2 100.0
$4,425 4,885 4,688 2,199 na
-2.1% -16.9 -15.5 13.9 na
100.0% 6.4 97.0 97.2 na
7.8% 12.6 15.5 15.5 na
100.0 100.0 100.0 95.6 100.0
Midland, Mich. Irving, Texas Wilmington, Del. Pittsburgh The Woodlands, Texas Danbury, Conn. Salt Lake City Plymouth, Minn. Allentown, Pa. Kingsport, Tenn.
11,224 11,187 11,108 9,192 8,102
-0.2 -0.3 11.8 -5.1 12.9
3,460 931 2,675 1,582 920
-0.1 23.6 -2.7 -2.6 -9.2
100.0 100.0 100.0 97.3 100.0
30.8 8.3 24.1 17.2 11.4
7,113 6,418 6,184 6,172 6,119 6,104 6,100 5,500 5,161 4,580
-9.3 -5.1 9.3 36.2 -4.8 0.1 0.0 -8.3 11.0 -4.9
100.0 100.0 16.4 75.2 100.0 100.0 100.0 100.0 43.6 18.9
Columbus, Ohio Dallas Morristown, N.J. Covington, Ky. Midland, Mich. Long Grove, Ill. Wickliffe, Ohio Berwyn, Pa. St. Paul Los Angeles
465 583 1,154 628 na 2,962 na na 682 720
-39.7 -27.3 10.7 108.6 na 7.1 na na 27.2 -16.4
100.0 100.0 19.6 72.7 na 100.0 na na 53.1 9.3
3,748 3,715 3,571
11.0 14.7 -1.3
100.0 27.5 100.0
Philadelphia St. Louis Houston
696 477 615
12.4 69.8 37.7
3,300 3,156 2,819
6.4 -1.8 -7.7
100.0 100.0 80.4
Boston Columbia, Md. Princeton, N.J.
290 564 363
2,745 2,685 2,629 2,212 1,976
-4.3 4.3 -13.1 3.5 1.7
100.0 80.7 100.0 100.0 100.0
Richmond, Va. Atlanta Philadelphia Richmond, Va. Dallas
1,886 1,804 1,769
21.1 -2.1 -18.0
100.0 100.0 100.0
Cytec Industries
1,708
-44.4
100.0
40 41 42 39 43
Sigma-Aldrich Kraton Polymers Olin Goodyear Reichhold
1,574 1,423 1,411 1,260 1,162
4.7 -1.0 1.6 -20.9 -1.8
60.0 100.0 64.6 6.0 100.0
— 46 48 47 44 48 50 — — —
Taminco Koppers MeadWestvaco Omnovai OM Group Innophos Innospec Petrologistics PolyOned Emerald Performance Materials
1,116 1,106 939 865 864 862 776 751 704 700
-0.6 8.9 15.8 -9.2 -22.2 6.4 0.3 22.1 29.2 5.3
100.0 71.1 17.2 76.8 52.8 100.0 100.0 100.0 23.5 100.0
St. Paul Northfield, Ill. Mayfield Heights, Ohio Woodland Park, N.J. St. Louis Houston Clayton, Mo. Akron, Ohio Research Triangle Park, N.C. Allentown, Pa. Pittsburgh Richmond, Va. Fairlawn, Ohio Cleveland, Ohio Cranbury, N.J. Littleton, Colo. Houston Avon Lake, Ohio Cuyahoga Falls, Ohio
$69,605 26,124 16,243 10,990 9,409
100.0% 7.8 64.0 69.2 100.0
6.4% 18.7 28.9 20.0 na
18,090 8,884 16,690 15,574 11,619
100.0 100.0 100.0 91.9 100.0
19.1 10.5 16.0 10.2 7.9
6.5 9.1 18.7 10.2 na 48.5 na na 13.2 15.7
6,229 9,000 6,396 9,665 13,301 10,167 na na 11,215 3,854
100.0 100.0 15.3 90.5 100.0 100.0 na na 63.8 6.0
7.5 6.5 18.0 6.5 na 29.1 na na 6.1 18.7
100.0 15.7 100.0
18.6 12.8 17.2
4,374 4,280 3,412
100.0 21.2 100.0
15.9 11.1 18.0
19.3 7.5 -26.3
100.0 100.0 75.1
8.8 17.9 12.9
4,399 5,090 4,070
100.0 100.0 68.1
6.6 11.1 8.9
518 302 348 366 377
-11.9 96.4 0.3 21.1 -31.9
100.0 94.3 100.0 100.0 100.0
18.9 11.2 13.2 16.5 19.1
3,437 1,147 3,030 1,258 2,027
100.0 63.6 100.0 100.0 100.0
15.1 26.3 11.5 29.1 18.6
163 129 -5
26.0 8.6 def
100.0 100.0 def
8.6 7.1 def
1,786 986 1,079
100.0 100.0 100.0
9.1 13.1 def
326
5.8
100.0
19.1
3,922
100.0
8.3
na 102 263 na na
na -45.4 7.4 na na
na 100.0 81.5 na na
na 7.2 18.7 na na
na 1,229 1,782 na na
na 100.0 64.1 na na
na 8.3 14.8 na na
120 83 224 90 44 110 100 144 67 na
-23.1 -6.7 10.3 3.6 -69.0 -19.7 91.0 221.9 53.9 na
100.0 65.6 32.1 95.9 nm 100.0 100.0 100.0 40.0 na
10.8 7.5 23.9 10.4 5.1 12.8 12.8 19.2 9.5 na
1,847 516 506 543 1,092 739 579 798 888 na
100.0 66.2 9.1 62.1 43.7 100.0 100.0 100.0 41.7 na
6.5 16.1 44.3 16.5 4.1 14.9 17.2 18.1 7.5 na
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 Sales include a significant amount of nonchemical products. e Fiscal year ended May 31. f Fiscal year ended Sept. 30. g Fiscal year ended Aug. 31. h Fiscal year ended Dec. 3. i Fiscal year ended Nov. 30. na = not available. nm = not meaningful. def = deficit.
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AIR PRODUCTS
ranking of the Top 25 foreign firms by U.S. chemical sales. For example, Solvay climbed to number eight because of its 2011 acquisition of French chemical maker Rhodia. AkzoNobel fell four spots to number nine after selling its U.S. architectural paints business to PPG Industries. Christopher D. Cerimele, director of the chemical practice at the investment banking firm Houlihan Lokey, has seen a pickup in deal-making over the past year. Companies that are selling are trying to get rid of divisions that are no longer a good fit, he says, and those that are acquiring want operations that line up closely with what they already have. A DECADE AGO, in contrast, companies
often ventured into unfamiliar territory for greater size and diversification. “Companies in this market are not making big stretches to grow revenues,” Cerimele says. “Now there is a strong strategic rationale.” Private equity firms are also eyeing the chemical industry, Cerimele says. Financing, which took a hiatus during the housing
ALL CLEAR Workers in the meltdown, has come back Private equity firms also control room at Air Products & have a positive impression strong, largely because Chemicals’ Pasadena, Texas, of central bank policies of the chemical sector, accustomer service center. around the world aimed cording to Cerimele. “They at stimulating economies see it as an attractive sector with low interest rates. within industrials right “The financing markets are as good as they now,” he says. Because chemical compahave ever been,” he says. nies supply every sector of the economy, a chemical investment is a way for a private equity firm to position itself for a strong STRONG YEAR recovery ahead. Foreign-owned chemical firms mostly saw strong increases Stock buyers seem to agree. C&EN’s ranking of firms by market capitalization U.S. CHEMICAL U.S. CHEMICAL shows that 2012 was a good year for chemiSALES CHANGE SALES AS cal stock prices. The combined market capiRANK ($ MILLIONS) FROM % OF TOTAL 2012 2011 COMPANY COUNTRY 2012 2011 U.S. SALES talization for the 33 publicly traded chemi1 1 BASF $18,772 -0.9% 100.0% Germany cal firms in the Top 50 was $277.2 billion 2 2 LyondellBasell Industries 12,934 -13.1 100.0 Netherlands at the end of 2012, an 18.1% increase from 3 3 Agriuma 10,776 12.8 100.0 Canada 2011. In contrast, the Standard & Poor’s 500 4 4 Bayer 5,908 20.5 48.0 Germany stock index rose 13.4% during the year. 5 6 Air Liquide 3,996 8.7 100.0 France DuPont held on to the top spot in this 6 7 Evonik Industries 3,116 -12.4 100.0 Germany 7 15 Linde 3,095 44.6 91.9 Germany ranking, despite a 1.0% decline in its mar8 22 Solvay 3,002 100.6 100.0 Belgium ket cap. Its margin over number two Dow 9 5 AkzoNobel 2,950 -30.8 100.0 Netherlands shrank to $3.1 billion from $8.3 billion the 10 10 Alfa Group 2,935 15.7 64.0 Mexico year before. 11 8 Braskem 2,889 12.1 100.0 Brazil There were a few impressive gainers 12 12 Arkema 2,819 12.6 100.0 France in the capitalization ranking. Axiall, the 13 17 Indorama 2,719 36.5 100.0 Thailand polyvinyl chloride and chlor-alkali firm 14 9 Potash Corp. 2,648 2.8 100.0 Canada 15 14 Syngenta 2,577 19.4 65.6 Switzerland formerly known as Georgia Gulf, enjoyed 16 11 Nova Chemicals 2,309 -8.7 100.0 Canada a 113.7% increase in market cap to $1.4 bil17 16 Yara 2,253 10.7 100.0 Norway lion. Axiall is merging with PPG’s com18 18 DSM 2,093 8.2 100.0 Netherlands modity chemicals business. Three other 19 20 Lanxess 2,071 10.5 100.0 Germany firms—Eastman, Westlake Chemical, and 20 21 Sasolb 2,031 26.2 100.0 South Africa Chemtura—each posted gains of more 21 19 Shin-Etsu Chemicalc 2,000 4.3 100.0 Japan 22 23 Lonza 1,803 48.2 100.0 Switzerland than 90%. 23 13 Total 1,759 -28.3 7.8 France If the instincts of stock investors and 24 25 Israel Chemical 1,115 8.1 100.0 Israel private equity firms turn out to be correct, 25 — Wacker Chemie 1,051 4.4 100.0 Germany C&EN’s 2014 U.S. Top 50 will reflect strong NOTE: Figures from companies that report in native currencies were converted to dollars at average annual improvement in the chemical sector. Perexchange rates from the Federal Reserve. a Sales include a significant amount of nonchemical products. b Fiscal year haps the industry will even return to hitended June 30. c Fiscal year ended March 31. ting records for sales and profits. ◾ CEN.ACS.ORG
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