NEWS OF THE WEEK
EARNINGS BEAT EXPECTATIONS FIRST QUARTER: Chemical firms worked around weak demand with attention to portfolios and prices
S
EVERAL MAJOR U.S. chemical firms posted
first-quarter earnings that exceeded analysts’ expectations despite continued weakness in the global economy. Company executives went into the quarter anticipating a weak sales environment and worked to divest underperforming assets and raise prices on specialty products. DuPont’s earnings per share of $1.56 were a few cents ahead of analysts’ forecasts. The firm reported that volumes edged up 2%. However, earnings declined by 5.7% from last year’s first quarter, to $1.5 billion, primarily because of weak prices for titanium dioxide. In a conference call with analysts, DuPont CEO Ellen J. Kullman pointed out that the white pigment business brings in needed cash but also delivers high volatility, which, she said, “drives everyone to distraction.” Also a drag on DuPont’s earnings was lower demand from industrial markets such as auto and solar panel manufacturing. On the positive side, higher prices and strong volumes for seeds and crop protection products drove the firm’s agriculture sales up 14% compared with the year-ago quarter. DuPont’s divestment of its performance coatings business allowed it to buy back $1 billion in shares and reduce debt. At Dow Chemical, price and volume management, along with a “laserlike focus on strategic portfolio management,” combined to push earnings to $819 million, up almost 15% compared with the first quarter of 2012, according to CEO Andrew N. Liveris. The firm’s earnings per share of 69 cents beat estimates by 8 cents. Sales were down 2.3% from 2012, but they were gener-
ally flat when excluding the impact of changes in the feedstocks and energy segment. Like DuPont, Dow grew its agriculture business by 14% compared with last year and undertook debt reduction, paying down $900 million in the quarter. In performance materials, volumes sank but prices edged up. Chemical analysts were especially impressed by results from Celanese, where per-share earnings of $1.14 were 36 cents higher than expected. The result highlights the company’s “lowest-cost position in acetyls, a high-growth engineered plastics business, and a stable, high-margin acetate tow business,” wrote David Begleiter, an analyst at Deutsche Bank, in a note to investors. Ashland and PPG Industries also exceeded analysts’
FIRST-QUARTER CHEMICAL RESULTS U.S. companies maintain earnings in the face of weak global demand SALES EARNINGSa ($ MILLIONS)
Air Products Ashland Celanese Cytec Industries Dow Chemical DuPont H. B. Fuller W.R. Grace Mosaic PPG Industries Praxair
$2,484 1,974 1,605 477 14,383 10,408 480 710 2,241 3,331 2,888
$290 143 183 34 819 1,459 21 53 345 235 414
CHANGES FROM 2012 SALES EARNINGS
6.0% -5.1 -1.7 26.2 -2.3 2.2 39.1 -5.8 2.3 -0.1 1.7
-2.0% 18.2 45.2 9.7 14.7 -5.7 40.0 -13.1 26.8 8.8 -1.2
PROFIT MARGINb 2013 2012
11.7% 7.2 11.4 7.1 5.7 14.0 4.4 7.5 15.4 7.1 14.3
12.6% 5.8 7.7 8.2 4.9 15.2 4.3 8.1 12.4 6.5 14.8
a After-tax earnings from continuing operations, excluding significant extraordinary and nonrecurring items. b After-tax earnings as a percentage of sales.
predictions. At Ashland, the Valvoline motor oil and oil change businesses had a strong quarter, and specialty ingredients held up well during a tough economic environment, according to CEO James J. O’Brien. PPG reported that it worked to control costs during the quarter and took advantage of strengthening coatings markets including automotive, aerospace, and U.S. construction.—MELODY BOMGARDNER
LITIGATION Court orders California to temporarily remove bisphenol A from toxics list California must remove bisphenol A (BPA) from its list of chemicals known to cause reproductive toxicity until an industry-led lawsuit challenging the listing is resolved, a California superior court ruled on April 19. California’s Office of Environmental Health Hazard Assessment proposed listing BPA as a reproductive toxicant under the state’s Proposition 65 in January and followed through with the listing earlier this month. Proposition 65 is a list of chemicals that are known to cause can-
cer, birth defects, or reproductive harm. The American Chemistry Council filed a lawsuit in March on behalf of the chemical industry in an attempt to stop the agency from listing BPA as a reproductive toxicant. The industry group claims that there is not enough evidence that BPA is harmful to humans. “We do not believe there is a scientific basis for including BPA on the Proposition 65 list, and we look forward to our case being heard on the merits sometime this summer,” says Steven G. Hentges, head of
CEN.ACS.ORG
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APRIL 29, 2013
ACC’s Polycarbonate/BPA Global Group. California decided to list BPA as a reproductive toxicant on the basis of a 2008 report by the National Toxicology Program that linked exposure to high levels of the plastics chemical to developmental problems in laboratory animals. A panel of independent experts reviewed the same study in 2009 but voted at the time not to add BPA to Proposition 65 because of the lack of evidence that it causes developmental defects in humans.—BRITT ERICKSON
