Earnings skyrocket in chemical industry Results reported at press time by U.S. chemical companies show that the first quarter of 1995 was very good indeed. Spurred by rising prices, increased demand, and improving foreign markets, sales increased dramatically for most firms. And companies in many cases are doubling, tripling, and even quadrupling earnings over last year's first-quarter levels. Thus, profitability is booming. Of 20 firms with sales of more than $200 million sampled by C&EN, eight report more than 100% earnings increases from last year's first quarter. And two—Georgia Gulf and IMC Global, formerly IMC Fertilizer—report close to 400% increases. At Georgia Gulf, with earnings up 374% from last year's first quarter to $60.2 million, unexpected production outages at chlorine-caustic soda and methanol units lowered sales volume, but this was more than made up by a 68% rise in the sales price of company products. Sales rose 63% to $314 million. Thus, the profit margin—earnings as a
percentage of sales—jumped to 19.2% from 6.6% in first-quarter 1994. IMC Global's earnings leapt 381% to $45.7 million. Wendell F. Bueche, chairman and chief executive officer, says, "IMC Global was able to effectively capitalize on virtually ideal business conditions during the period." He cites record purchases of concentrated phosphates and potash by China. And the North American agricultural sector began strong seasonal demand for crop nutrients. Sales surged 34% to $550 million and the profit margin rose to 8.3% from 2.3%. The largest dollar rise in earnings was at Dow Chemical, up 250% or $502 million to $633 million on a sales increase of 31% to $5.96 billion. This pushed the profit margin to 10.6% from just 4.0% in the first quarter of 1994. Dow's chairman and CEO, Frank Popoff, says, "Improving global conditions, advances in margin restoration, and the benefits of reengineering the company are producing strong results." Many firms cite continued improvement in foreign markets as one of the reasons for the rise in sales and earnings. This seems especially true for firms that export to, or manufacture products in, European and Pacific Rim nations. And
Many chemical firms racked up big earnings increases FIRST-QUARTER 1995 Sales
Earnings8
($ millions)
Air Products Albemarle Arco Chemical Dow Chemical Eastman Chemical
Change from 1994 Sales
Earnings
Profit margin15 1995
1994
14% 30 51 31 25
21% 35 180 250 136
9.0% 4.7 11.0 10.6 10.7
21.5 21.4 60.2 67.5 68.3
0 29 63 25 27
54 206 374 77 2
9.2 6.4 19.2 5.0 12.0
6.0 2.7 6.6 3.5 14.9
550.0 416.7 2,318.0 921.0 315.4
45.7 40.6 229.0 89.9 37.8
34 4 16 14 -6
381 13 18 26 12
8.3 9.7 9.9 9.8 12.0
2.3 9.0 9.7 8.8 10.1
766.1 756.0 985.0 1,453.0 602.5
38.4 65.0 96.0 210.0 23.6
27 24 15 29 9
151 55 43 197 7
5.0 8.6 9.7 14.5 3.9
2.5 6.9 7.8 6.3 4.0
$ 982.9 313.3 1,141.0 5,962.0 1,232.0
$ 88.6 14.6 126.0 633.0 132.0
Ethyl Geon Georgia Gulf W.R. Grace Great Lakes Chemical
234.3 336.2 314.0 1,345.2 569.0
IMC Global Lubrizol Monsanto Morton International Nalco Chemical Olin Praxair Rohm and Haas Union Carbide Witco
8.5% 4.5 5.9 4.0 5.7
a After-tax earnings from continuing operations, excluding significant nonrecurring and extraordinary items, b After-tax earnings as a percentage of sales.
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company executives expect improvement in these regions to continue—leading to better results for at least most of this year. But this optimism is tempered with caution about U.S. markets. J. Lawrence Wilson, chairman and CEO at Rohm and Haas, sums it up: "Rohm and Haas is optimistic about the rest of 1995 as long as worldwide economies remain favorable and raw material prices don't escalate rapidly. However, we do not expect the full year-over-year earnings comparison to be as dramatic as the comparison for the first three months of 1995." William Storck
New catalysts to boost polyethylene production Projecting that it can as much as triple production in existing units, Exxon Chemical has retrofitted a world-class polyethylene plant to use metallocene catalysts operating in condensed and supercondensed modes. Exxon says the retrofit at its Mont Belvieu, Texas, complex should raise production in a given unit 60 to 200% and cut unit costs 50%. Savings are expected from improved heat transfer and control in the reactor. Metallocene catalysts contain one or more cyclopentadienyl groups in combination with a transition metal. The preferred metallocenes, for Exxon's purposes, have two or more substituents on at least one of the cyclopentadienyl groups. Mixtures of metallocenes can also be used. The catalysts may be supported on particulate materials such as polymers, silica, or alumina. Metallocenes are slated to phase out currently used Ziegler-Natta catalysts in all of Exxon's polymer facilities around the world. Exxon also is joining with Hoechst of Germany and with Mitsui Petrochemicals of Japan to license metallocene technology. Douglas M. Selman, vice president for polymer technology at Exxon Chemical, says the company views metallocene catalysts as "the key to future polymer innovation. We have chosen to build a strong proprietary position around metallocene catalysts." Success in the polyolefins business is becoming ever more dependent on a strong patent position. With commercialization of the metallocene condensed mode technology, Exxon believes it can MAY 1,1995 C&EN 7
