NEWS OF THE WEEK INDUSTRY
CHEMICAL EARNINGS CONTINUE TO RISE Growth is slower than in previous quarters, in part due to hurricanes
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HE T H I R D QUARTER SAW
chemical companies gen erally continuing to build on past quarters, as earnings in creased at most top firms surveyed by C&EN. But earnings growth among the companies was lower than it had been in previous re porting periods. Nevertheless, a few companies still reported big gains. Nalco Holding's earnings rose 123.1% to $20.3 million; at Eastman Chemi cal, earnings increased 106.6% to $126 million; and Chemtura's earnings were up 110.9% to $40.7 million. Yet four companies saw earn ings below where they were a year earlier. PolyOne's results fell 42.2% to just $6.7 million, Georgia Gulf declined 16.5% to $27.9 million, Engelhard was off 2.2% to $58.5 million, and PPG Industries slipped a slight 0.5% to $193 million. Most companies were in the middle, with respectable increases from year-earlier levels in both earnings and sales. Industry lead er Dow Chemical had earnings growth of 29.8% in the quarter to $801 million as sales increased 11.8% to $11.3 billion. As in past quarters, Dow noted higher feed stock and energy prices. This time, though, they were exacerbated by the hurricanes, which raised costs even higher while causing the company to close plants and declare force majeure on some products. Dow was not alone in being af fected by the hurricanes. DuPont says business interruptions from Hurricanes Katrina and Rita low ered third-quarter sales by about $100 million and reduced pretax operating income by approxi WWW.CEN-0NLINE.ORG
8.3% sales increase to $1.95 billion. PPG also noted direct costs of $6.3 million associated with the hurricanes. Of course, many, if not most, of the surveyed companies that did not break out costs also suffered from the hurricanes—if not from plant shutdowns, then in the form of the higher energy and feedstock costs the storms precipitated.—
mately $50 million. Earnings at WILLIAM ST0RCK DuPont were up 31.6% to $333 million on a modest 2.3% increase in sales THIRD-QUARTER RESULTS to $5.87 billion. Earnings continue improvement at most firms Rohm and Haas estimates that shut SALES EARNINGS3 CHANGE FROM 2004 PROFIT MARGIN» downs caused by the 2004 2005 SALES EARNINGS ($ MILLIONS) 8.6% 8.5% 6.5% 4.7% $2,070.8 $179.0 Air Products hurricanes cost it 4.9 4.2 21.4 506.6 5.4 22.4 Albemarle about $7.0 million 4.4 918.4 2.0 110.9 -4.9 40.7 Chemtura after tax. But CEO 6.1 7.1 29.8 11.8 801.0 11,261.0 Dow Chemical Raj L. Gupta says, 4.4 5.7 31.6 2.3 333.0 5,870.0 DuPont "Despite the contin ued high raw mate 3.9 6.9 106.6 126.0 1,816.0 15.3 Eastman Chemical rial and energy-re 6.0 4.8 21.4 58.5 1,208.3 -2.2 Engelhard lated costs, as well 5.3 27.9 525.2 5.6 -16.5 -11.9 Georgia Gulf as some plant opera 80.6 2.6 2.6 4.9 6.4 3,121.8 Huntsman tional issues, which 4.1 4.9 1,013.4 33.5 10.6 49.8 Lubrizol were compounded by the hurricanes 2.4 834.9 1.2 123.1 7.8 20.3 Nalco and related logistical 2,547.0 8.1 7.6 -0.5 5.7 193.0 PPG Industries disruptions, Rohm 1.2 579.0 2.1 -42.2 4.9 6.7 PolyOne and Haas delivered 10.6 11.0 208.0 1,890.0 17.5 12.9 Praxair another strong quar 7.6 8.7 169.0 1,953.0 23.4 8.3 Rohm and Haas ter." The company's a After-tax earnings from continuing operations, excluding significant nonrecurring and earnings rose 23.4% extraordinary items, b After-tax earnings as a percentage of sales. to $169 million on an RESEARCH
NIH Grant Information Leaks Onto Web
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he National Institutes of Health has confirmed that the agency is dealing with a serious "secu rity breach" in the electronic handling of grant applications, which contain private, confiden tial, and proprietary information. The agency says the breach occurred when a "peer reviewer downloaded review materials in a way that allowed Google to capture, index them, and make them ac cessible via its search engine." The agency is releasing few other details about the incident—including when it occurred—because of concerns that such information could help hackers. NIH spokesman Don Ralbovsky tells C&EN that about 140 applications were compromised as a result of the inadvertent disclosure. NIH addressed the breach and repaired it within 90 minutes of its discovery, he says. NIH has posted an open letter to peer reviewers about the incident on its grant information website. The letter notes that "the risks associated with any security breach are potentially very serious." In this instance, however, "NIH has no evidence that the released application information was used for illegal or malicious activities." The letter also reassures reviewers that "NIH is committed to protecting the confidentiality of grant information while providing a highly secure, electronic peer review system." In addition to the immedi ate action taken to address this breach, the letter explains that the agency is looking into other techni cal solutions to protect grant-related information.—SUSAN MORRISSEY
C & E N / N O V E M B E R 7, 2005
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