NEWS OF THE WEEK BUSINESS
EARNINGS UP AGAIN AT CHEMICAL FIRMS Price increases help improve profitability for chemical makers
T
HE EARNINGS SURGE THAT
began a year ago continued in the first quarter of 2005 for most of 13 large U.S. chemical makers. Despite weakness in some parts of the e c o n o m y such as the automotive sectorchemical makers had little trouble passing along higher energy and raw material prices and increasing their profits. A decent economy helped. Gross domestic product percolated along at a seasonally adjusted rate of 3.1% during the first quarter, according to the latest government estimate. GDP grew 4.5% in the first quarter a year ago, so the economy is slowing. A weak U.S. dollar helped, too. Sales booked overseas were more valuable in U.S. dollars because of the effect ofcurrency translations. For Dow Chemical, "fundamentals remain solid across all operating segments and geographic areas," Chief Financial Officer J. Pedro Reinhard says. "This was an outstanding quarter." Reinhard attributes the results to "significant price improvements, supported by solid volumes, which enabled further margin recovery across virtually all of DoVs businesses, despite an increase of more than $1 billion, or 30%, in purchased feedstock and energy costs." DuPont'sfirst-quarterresults, with earnings up less than 1%, are better than they first look, because last year's results include the businesses sold to Koch Industries. DuPont CEO Charles O. Hollidayjr. says, *W e are confident we will grow earnings and cash flow again this year." But many chemical makers are cautious, although they exWWW.CEN-0NLINE.ORG
in the durable goods markets, including the North American automotive and appliance sectors. In an earnings telephone call with analysts, Air Products & Chemicals Chief Financial Offi-
EARNINGS Strong growth continues for leading firms in first quarter
pect the remainder of the SALES EARWtHOS* CHAH9C FROM 200* PROFIT HAW6INb year will continue strong. ISmUJONSI SALES EARHmOS 7.9% 24.2% 8.8% 7.6% Air Products $2,003.3 $175.3 DuPont, for instance, 58.4 4.9 510.0 25.2 52.7 Albemarle 5.1 notes that lower North 527.0 5.4 8.2 Cabot 43.0 19.4 7.2 American car production Dow Chemical 11,679.0 1,353.0 11.6 25.5 5.0 188.5 is affecting its coatings 12.4 DuPont 7,826.0 967.0 -4.6 11.7 0.3 businesses. 1,026.7 -1.3 5.6 Engelhard 58.0 15.3 4.8 Rohm and Haas CEO 5.9 452.5 0.2 -59.0 1.3 Ferro 3.2 Raj L. Gupta is concerned 4.1 505.1 6.4 20.5 3.3 Hercules 30.6 because high oil prices and 67.9 5.4 970.1 52.6 58.4 5.7 Lubrizol 19.9 1,909.0 379.0 27.4 12.4 Monsanto 103.8 energy costs—as well as risPPG Industries 2,493.0 186.0 10.1 7.5 56.3 5.3 ing interest rates—are hav10.7 Praxair 1,827.0 195.0 19.3 18.9 10.7 ing an effect on global de7.9 159.0 10.4 Rohm and Haas 2,022.0 39.5 6.2 mand, and some markets, a After-tax earnings from continuing operations, excluding significant extraordinary such as building and conand nonrecurring items, b After-tax earnings as a percentage of sales. struction, are showing signs ofslower growth. Although that means less demand for cer Paul E. Huck admitted that the some of the company's products, firm expects its sales to electronfavorable currency translations ics makers to be flat because busihave helped to offset the effect. ness with liquid-crystal display makers is not ramping up as quickFerro notes that its sales were ly as expected. But overall, Air affected by continued weakness Products had a very good quarin the electronic materials busiter.—MARC REISCH ness, and that it discerns softness
ASTROCHEMISTRY
Penetrating Titan's Hazy Organic Stew
T
he upper atmosphere of Saturn's giant moon Titan, with its obscuring methane haze, also is awash with complex hydrocarbons, planetary scientists announced last week. Buring a doseflybyof Titan on April U, mass and ion spectrometers aboard NASA's Cassmi spacecraft detected organics containing as many as seven carbon atoms, in addition to nitrites. Cassini imaged the moon's opaque orange-yellow atmospheric blanket at visible wavelengths (left). A false-color composite (right), created by combining two infrare* images end a visible image, reveals surfaoHeetures as green and atmospheric methane as red. The discovery of a wide variety and high concentration of hydrocarbons in Titan's atmosphere surprised scientists: They had expected that the compounds, produced
when ultraviolet light photolyzes atmospheric methane and nitrogen, would immediately condense and rain down onto Titan's surface. Earlier this year, the European Space
Agency's Huygens probe, which landed on Titan, found evidence of a hydrocarbon goo that was coating trenched regions of the moon's SUrfact.-EUZABETH WILSON
C & E N / MAY 2, 2005
11
