News of the Week Chemical group' s fourth-quarter earnings fell 24% from 1984 FULL-YEAR 1985
FOURTH-QUARTER 1985 Sales
Earnings* ($ millions)
Air Products American Cyanamid Celanese W. R. Grace Hercules International Minerals Monsanto Morton-Thiokol National Distillers Olin PPG Industries Rohm & Haas Union Carbide
$ 475.9 890.0 760.0 2013.2 636.2 341.2 1760.0 480.4 649.1 390.6 1110.0 470.7 2320.0
$34.4 38.7 50.0 44.7 31.0 3.3 -59.0 32.0 17.9 8.4 59.0 24.7 37.5
Change from 1984 Sales Earnings
9% 0 -8 8 3 -10 13 8 11 -10 0 4 -3
7% -17 52 -21 -30 -90 def 10 16 6 -11 -2 188
6 Profit Margin
1985
1984
7.2% 4.3 6.6 2.2 4.9 1.0 def 6.7 2.8 2.1 5.4 5.2 1.6
7.4% 5.2 4.0 3.0 7.1 9.1 2.6 6.5 2.6 1.8 6.0 5.5 0.5
Earnings* Sales ($ millions)
$1869.9 3536.1 3046.0 7260.1 2587.0 1535.2 6750.0 1888.5 2289.0 1751.1 4300.0 2051.2 9000.0
$145.8 142.9 182.0 106.0 142.1 55.2 213.0 126.5 60.3 39.7 303.0 141.2 251.3
Change from 1984
Profit margin"
Sales
Earnings
1985
1984
7% 0 -8 6 1 -4 1 2 2 -3 2 0 -5
5% -28 12 -46 -28 -47 -51 11 -21 -46 0 -18 -26
7.8% 4.0 6.0 1.5 5.5 3.6 3.2 6.7 2.6 2.3 7.0 6.9 2.8
7.9% 5.6 4.9 2.9 7.7 6.4 6.6 6.2 3.4 4.1 7.2 8.4 3.6
I
a Excludes significant nonrecurring items, b After-tax earnings as a percentage of sales, del = deficit.
quarters for most of the company's earnings, recorded a $1 million loss, and the electronic materials unit lost $33 million, both before taxes. Another $46 million before taxes was lost by the R&D-intensive biological sciences unit. The fertilizer slump hit International Minerals & Chemical particularly hard, leading to a 90% drop in earnings in the quarter. "Selling prices remained weak throughout the quarter," explains IMC president George D. Kennedy. "Shipments were off in key product lines." IMC's fertilizer group reported operating net income of $14.3 million in the quarter, compared with $45.6 million a year earlier. Weak prices for phosphate-based and nitrogen-based fertilizer also undercut W. R. Grace's agricultural chemicals business, resulting in a loss that was the chief reason for a 21% decline in earnings in the fourth quarter. Grace's specialty chemical operations also earned less than in the year-earlier period. Hercules' net income declined 30% in the fourth quarter, and earnings dropped 11% at PPG Industries. At Rohm & Haas earnings fell 2%. The best performer in the group over the course of the year was Celanese. Net income for the company rose 52% in the fourth quarter and 12% for the full year. In the fourth quarter, Celanese's chemicals group earned $15.5 million, up 91%; fibers, $17.6 million, up 63%; and specialties, $9.7 million, up 143%. Only 6
February 10, 1986 C&EN
the company's Brazil /Mexico operations faltered, with earnings falling 22% to $6.5 million. Air Products, with operating profit increases of 22% for industrial gases and 6% for chemicals, offset a
loss by its engineering services and equipment and technology segments to record a 7% rise in net income for the quarter. Other earnings gainers in the quarter were MortonThiokol, up 10%, and Olin, up 6%. D
Institute to spend $1 billion for medical research The substantially expanded Howard Hughes Medical Institute will spend more than $1 billion to support medical research over the next five years. The institute's president, Donald S. Fredrickson, says the money will be spent primarily in four areas of basic medical research—genetics, immunology, metabolic regulation, and neuroscience. Within those areas, the research will emphasize basic mechanisms and technologies that underlie virtually all disease processes, he says. Although the institute has been sponsoring medical research since it was founded in 1953, until now that support has amounted to between $1 million and $2 million per year. The institute was established by aviator/industrialist Howard Hughes, who served as its sole trustee. Following his death, court action created in 1984 a public board of trustees, and the board decided to greatly expand the medical research program of the institute. Sale of the institute's sole asset, Hughes Aircraft stock, completed last December, established an endowment of $5 billion to support the research. Thus, the institute has become the
largest private biomedical research organization in the world. Even though the institute's funding has increased vastly, it will focus on the same four areas that the institute has been specializing in for many years. Much of the new funding will be distributed among 22 institute-sponsored laboratories already active or being established in academic medical centers and their teaching hospitals in 14 states. Altogether, the funding will support a research staff of about 900 people under the supervision of more than 100 scientists. Funding will be concentrated most heavily in the Boston area, where more than $100 million will finance research at Massachusetts General Hospital, Children's Hospital, and the Brigham & Women's Hospital. Other university medical centers receiving funding are Columbia, Rockefeller, Yale, Johns Hopkins, Duke, Washington (St. Louis), Vanderbilt, Baylor, Stanford, as well as the universities of Pennsylvania, Chicago, Texas, Michigan, Washington, Utah, and California (at San Francisco, Los Angeles, and San Diego). D
