CHEMICAL & ENGINEERING
NEWS VOLUME 40, NUMBER is
The Chemical World This Week
APRIL 30, 1962
Sales and Profits Advance Sharply First-quarter earnings of chemical companies reflect record sales, but faltering prices dampen results No matter how you look at it, this year's first quarter was both busy and profitable for chemical companies. Industry sales during the three months were higher than ever before, about 15% ahead of a year ago. To meet increased demand, output rose a like amount. And increased production made operations more efficient, result ing in a boost in industry earnings by roughly 20%. These over-all results are reflected in first-quarter reports from individual companies. Practically without ex ception, firms turned in sales higher than a year ago. Profits rose for about eight out of 10 of the companies re porting so far.
The trend in profit margins was less clear-cut, however, although more than half of the companies show an improvement, including many of the major basic chemical producers. Also IQSS clear-cut is the trend from last year's final quarter to this year's first period. Although sales in the more recent quarter were slightly above those of 1961's fourth quarter, the latter was generally the more profit able. Quarter-to-quarter comparisons may not present a completely true pic ture of the actual trend, to be sure. Seasonal factors and year-end account ing adjustments can have a significant impact on fourth-quarter results. No Surprise. The sharp gain in
year-to-year results, moreover, comes as no surprise. Last year's first quarter marked the trough of the 1960-61 re cession; profits were at their lowest point since the first half of 1958. Pro duction and sales in the industry picked up briskly thereafter, and prof its followed suit. As a result, it is still too early to draw a firm conclusion as to how 1962 as a whole will stack up against last year in the industry's profit-and-loss statements. This year is bound to be better, if only because it has got off to a much faster start. But not until re sults for the first half are available three months from now will it be more clear just how much better.
FACTORS INFLUENCING PROFITS: 1961 Average» 100
115
ι Sales
Wholesale Prices
Production
9m mm « ι $mm mm %m
Dec.
Mar.
Jun.
Sept
Dec.
Mar.
Data based on seasonally adjusted figures for chemicals and allied products from the Federal Reserve Board, the
Jun.
Sept·
Dec.
Mar.
Jun.
Sept.
Dec.
Department of Commerce, and the Department of Labor and on C&EN estimates APRIL
3 0,
1962
C&EN
23
It is already evident that the year ahead will not be so smooth sailing as a cursory look at first-quarter results might suggest. Sales volume and out put have been rising less rapidly in the past few months, for one thing. And although profit margins have widened somewhat over the past 12 months, the improvement is less marked than many in the industry had hoped for. Com panies are still facing the problem of keeping operating costs in line with sales volume, despite higher operating rates.
Problem in Prices. And much of this problem, in turn, hinges on the continued decline in prices of chemical products. The deterioration of prices, in fact, is probably the darkest cloud in the industry's business picture now. The cost-price squeeze remains. Allied Chemical, one of the hand ful of companies that scored lower earnings this year than in 1961, points out that low prices, particularly for plastics and related materials, had an unfavorable effect on profits. For the full year, Allied expects sales to be 5
to 10% ahead of last year's volume, but it figures earnings will be little changed. (Allied adds that firstquarter earnings were penalized by 8 cents per share from increased de preciation and heavy start-up costs. ) International Minerals, which also turned in lower earnings, says "highly competitive pricing ,, in phosphate ma terials and mixed fertilizers affected earnings during the quarter. Dow likewise blames lower prices for its failure to push up profits despite higher sales.
Sales, Earnings, Profit Margins Generally Show Gains from a Year Ago CHEMICALS Air Reduction Allied Chemicala American Cyanamid American Enkac American Potash Atlas Chemical Catalin Celanese Chemetron Commercial Solvents* Diamond Alkali Dow Chemical7 Du Pont Eastman Kodak" Freeport Sulphur General Aniline Hercules Powder Hooker Chemical7 Interchemical International Minerals Mallinckrodt Metal & Thermit Monsanto Chemical Nalco Chemical National Distillers National Lead National Starch Olin Mathieson Pan American Sulphur Pennsalt Reichhold Chemicals Rohm & Haas Spencer Chemical Stauffer Chemical Texas Gulf Sulphur Thiokol Chemical Union Carbide
Net Sales, 1962 (millions)
Change from 1961
$ 61.4
+13% +6 +15 +39 +3 +9 +2 +27 +13 +35 +13 +16 +13 +13 +21 +15 +22 +11 +11 +9 +13 +28 +18 +8 +10 +10 +9 +9 +5 +12 +15 +13 +15 +1 +11 +44 +11
. 204.Sb
170.3 31.3 11.4 20.86 4.7
78.9 37.5 20.4 36.5 210.8 579 218.7 14.3 44.7 105.06 38.5
35.1 38.7 9.6 12.4 259.8 13.5 187.5 138.4 17.8 171.7b 4.6 24.6 27.3 58.4 22.5 56.5 14.8 60.5 405.6
First Quarter, 1962 Net Income Change 1962 from 1961 (millions) $ 4.3 12.1 17.2 2.0 1.1 0.9 0.03 6.7 1.2 1.7 2.3 12.3 105 26.3 3.0 2.0 7.0 3.0 1.2 1.8 0.2 0.5 19.2 1.2 6.3 11.3 1.0 6.5 0.6 1.4 0.5 5.5 1.3 4.8** 3.3 1.5 37.7
+37 -9 +41 +231 +8 -4 -31 +88 +52 +34 +11 +2 +20 +20 +12 +53 +25 +14 +52 -26 —10 +105 +24 +10 +20 +10 +30 +10 -8 +13
Net Income % of Sales 1962 1961 7.0% 5.9 10.16.4 9.7 4.5 0.7 8.5 3.2
5.8% 6.8 8.2 2.7 92
51 1, 0 57 24 82 64 6.7 17.0 11.3 22.7 3.4 6.5 7.6 2.6 6.7 2.2 2.6 7.1 8.9 3.1 8.2 4.7 3.7 13.6 5.5
+37 —18 +26 +21 +40 +12
8. 6. 5. 18. 12. 21.1 4.6 6.6 7..8 3..5 4..6 1..8 4..2 7..4 9..0 3..4 8..2 5..7 3..8 12..0 5..6 1..8 9..4 5..8 8..4 22..3 2..4 9.3
7.7 8.1 6.8 20.5 2.5 9.3
+15 -17 -2 -24 +42 +25 +4
12.0 3.8 11.9 2.4 11.3 18.8 13.2
11.2 4.9 12.1 3.5 9.1 18.0 13.8
a
Earnings/Share First First Fourth Quarter Quarter Quarter 1961 1962 1961 $0.98 0.46 0.81 1.52 0.46 0.27 0.03 0.73 0.40 0.56 0.67 0.42 2.23 0.68 0.40
$0.79 0.68 .06* .69 .18 .08 0.75 0.61 0..53 0..85 0..48 2..77 d 1..22 0..48
$0.72 0.50 0.57 0.46 0.43 0.28 0.05 0.32 0.26 0.43 0.59 0.42 1.85 0.56 0.36
0.38 0.40 0.55 0.63
1.25
0.39 0.44 0.75 0.31 0.90 0.52 0.65 0.46 0.54 1.29 0.53 0.87 0.19 0.32 0.04Λ 4.02 0.45 0.39 0.36 0.32 1.26
0.30 0.35 0.35 0.90 0.44 0.31 0.55 0.46 0.37 0.84 0.35 0.44 0.26 0.31 0.01* 3.39 0.53 0.39 0.27 0.22 1.12
0.65 0.23 0.38 0.36 0.60 0.58 0.40
0.73 0.20 56 54 68 41 43
0.57 0.28 0.39 0.47 0.41 0.46 0.39
39 64 69 50 46 92 0.46 0.50 0.24 0.35 0.11 4.66 0.41 0.50£ 0.33 0.30
PHARMACEUTICALS Merck Miles Laboratories Parke-Davis Rexall Drug Schering Smith Kline & French Upjohn
58.9 25.0 47.2 68.6 22.1 44.9 42.8
+7 +8 —1 +14 +15 +17 +8
7.1 0.9
a Includes operations of Union Texas Natural Gas Corp. for both periods. & Includes other operating revenues, c For first 12 weeks, d For final 16 weeks rather than 12 weeks, e Figures for 1962 include Northwest Nitro-Chemicals, consolidated this year, which adds 10 cents per share to first-quarter earnings. / For quarter ended Feb. 28. ο Net loss in 1961. h Includes profits from sale of investments, i Includes capital gain equal to 3 cents a share.
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C&EN
APRIL
30,
1962
