R EWS OF THE WEEK I
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BUSINESS
MORE COMPANIES WARN ON EARNINGS Air Products, Cambrex, and Rhodia lower expectations
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IGNS ARE INCREASING THAT
many chemical companies' first-quarter earnings will be below expectations. Air Products & Chemicals and France's Rhodia say results for the first three months of 2003 will not meet earlier projections. And Cambrex predicts lower earnings for the year. Air Products says earnings for the quarter that ended March 31 will be between 51 and 54 cents per share because of lower than expected volumes in N o r t h American merchant gases and
Tirouflet
SUPREME
performance polymers business es. In addition, higher energy and raw material costs impacted its merchant gases, performance polymers, and methylamines businesses. Air Products had ear lier projected earnings of about 56 cents. Cambrex has reduced its earn ings estimates for the full year to arange of $1.05 to $1.25 per share. This includes an after-tax charge of 32 cents per share, related to a legal settlement with Mylan Lab oratories. In January, Cambrex had forecast 2003 earnings of be
COURT
PUNITIVE AWARD RULED EXCESSIVE High court's decision may affect outcome of asbestos, PCB litigation
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R O P O N E N T S OF T O R T RE-
form are claiming victory af ter a Supreme Court deci sion last week that struck down excessive punitive damage awards.
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2003
The Court's ruling applied to a policyholder suit against an in surer that refused to settle a claim from a car accident. But business proponents say the ruling is like ly to apply more broadly and af fect asbestos and PCB litigation. In the 6 to 3 majority opinion on the case, State Farm v. Campbell, Justice Anthony M. Kennedy wrote, "The Due Process Clause ofthe 14th Amendment prohibits the imposition of grossly exces sive or arbitrary punishments." Punitive damages were $145 million; compensatory damages were $ 1 million. The opinion rec ommended that damage awards be limited to single-digit mul
tween $2.00 and $2.15 per share. Cambrex says 2003 revenues in its biosciences segment could be flat or show as much as a 5% increase compared with last year. The unit is hurt by the loss of an undisclosed biopharmaceutical customer whose product failed to win FDA approval. At Rhodia, the high price of petrochemical raw materials, a weakening in demand, and a de cline in the value of the dollar will cause a decline of about 2 0 % in earnings before interest, taxes, depreciation, and amortization to some $130 million. Earlier this month, Rhodia's board rejected a minority share holder draft resolution calling for the early termination of C E O Jean-Pierre Tirouflet's member ship on the board. The board al so advised shareholders to vote against the resolution at the com pany's annual meeting.—WILLIAM ST0RCK
tiples of compensatory awards. "This is the best outcome we could have hoped for," says Don Evans, senior counsel for the American Chemistry Council. "The days of punitive damage awards of 100 to 500 times high er than compensatory damages are over." But Robert S. Peck, president of the Center for Constitutional Litigation (CCL), cautions that the Court's opinion was based on an atypical case. "Punitive dam ages are rare," he says, and they are often smaller than compen satory awards. If the Court's guidelines have any effect, Peck says, they could actually increase the median pay out of awards made. CCL is the in-house law firm for the Associ ation of Trial Lawyers of Ameri ca, a group whose members rep resent personal injury victims. Even a Dow Chemical spokes man is equivocal. He cautions, "Time will tell whether the low er courts will follow the Supreme Court's lead."-M ARC REISCH HTTP://WWW.CEN-ONLINE.ORG
