CHEMICAL & ENGINEERING
NEWS VOLUME 41, NUMBER 17
The Chemical World This Week
APRIL 29, 1963
Sales Up But Earnings Uneven in First Quarter First quarter 1963 results show chemical sales are gaining, though net income remains unsteady First
CHEMICALS Air Reduction Allied Chemical American Cyanamid Catalin Celanese Commercial Solvents Diamond Alkali Du Pont Freeport Sulfur Hercules Powder Interchemical International Minerals Matheson Michigan Chemical Monsanto Chemical Nalco Chemical National Distillers National Lead National Starch Pan American Sulphur Rohm & Haas Stauffer Chemical Stein Hall Texas Gulf Sulphur Union Carbide
Quarter 1963 Change from 1962
Net Sales 1963 (millions)
$72.5 222.3 173.3 4.5 80.8 20.4 37.7 607.0 14.8 112.1 34.5 52.7 2.3 2.3 273.7 14.4 178.0 143.6 17.8 68.1 56.8 18.6 14.7 383.7
+ 0.2%
+9 +2 -
4
+2 -
1
+3 + 5 + 4 +7 - 2 +12
+1 -14
+5 + 7 - 5
+4 -
0.1
+ 4.0 + 0.4
+ 9 -
0.8 5
Net
Income 1963 (millions)
$4.0 16.8 18.7 0.07 6.7 1.0" 2.1. 94.0 3.0 6.0 1.2 4.9,, 0.18 0.04 15.6 1.2 4.8 11.0 2.3 0.9 6.5 4.1 0.4 2.3 34.9
Change from 1962
-21% +39
+8 +125 - 0.5 -37 - 7 -10 - 0.3 -14 - 3 +172 -12
+9 -22 - 1 -25 - 2 +11 +66 +10 -13
+ 8 -30 - 8
Profits as % of Sales 1963 1962
5.5% 7.5 10.7 1.6 8.3 5.1 5.7 15.5 20.3 5.3 3.5 9.3 7.7 1.6 5.7 8.3 2.6 7.7 6.2
7.0% 5.9 10.1 0.7 8.5 8.1 6.3 18.1 21.1 6.6 3.5 4.6
9.5 7.3 1.9 15.8 9.1
9.4 8.4
7.4 9.0 3.4 8.2 5.7
22.3 9.3
Earnings/, First Quarter 1963
Share First Quarter 1962
$0.80 0.64 0.86 0.07 0.73 0.36« 0.62 2.00 0.40 0.32 0.53 1.71 0.28 0.05 0.54 0.49 0.34 0.91 0.49 0.40 1.33 0.44 0.44 0.23 1.16
$1.03 0.46 0.81 0.03 0.73 0.56 0.62 2.23 0.40 0.38 0.55 0.61 0.31 0.04 0.69 0.50 0.46 0.92 0.45 0.24 1.20 0.50 0.40 0.33 1.25
0.80 0.39 0.37 0.56 0.49 0.56 0.46 0.29
0.65 0.35 0.38 0.35 0.60 0.58 0.40 0.28
PHARMACEUTICALS Merck Miles Laboratories Parke-Davis Rexall Drug Schering Smith Kline & French Upjohn Warner-Lambert
63.9 26.6 46.7 65.7 22.2 50.9 46.1 73,6
+9 +1 - 1 - 3 + 0.5 +13
+5 -
1
8.6 1.6 5.4 2.6 2.0 8.2 6.5 7.1
« After provision for Canadian income tax on earnings of Northwest Nitro-Chemicals, of previous years' losses.
Reports of earnings of chemical and drug companies for the first quarter of this year show that sales were greater than for the same period in 1962. The percentage increases, how-
+22 +12 - 4 +62 -18 - 5 +14
+ 2
13.4 6.0 11.6 4.0 9.2 15.9 14.1 9.7
12.0 3.8 11.9 2.4 11.3 18.8 13.2
Ltd., not required in the comparable 1962 period because of carry forward
ever, were not large—on average about 2%. Some companies did have large sales gains, with Smith Kline & French increasing its sales by 13% over the sales in the first quarter of 1962.
Among the chemical producers with sales increases above the average for this quarter were Allied Chemical, Du Pont, Hercules Powder, and Monsanto. But looking back at the sales APRIL
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performance of three of these companies in the first quarter of 1962 (when the percentage increases then over the previous year's first quarter were for Du Pont 1 3 % , for Hercules Powder a very strong 22%, and for Monsanto 1 8 % ) , it is evident that the first quarter 1963 sales gains are fairly well down. Allied made a particularly strong gain in net income with a 39% increase over the first-quarter 1962 results. Reasons given by Allied Chemical for its strong improvement in earnings (64 cents per share compared with 46 cents in first-quarter 1962) were increased sales of fibers and good volume in major basic chemicals. A significant increase in sales of fibers was a reason given also by American Cyanamid for sales and earnings that were the highest ever recorded by it in a three-month period. Though Cyanamid's sales were up by only about 20%, its earnings increase was 8%. Better Year. The continuing fall in prices of chemicals is having its effect on profits. Monsanto chairman Charles A. Thomas described declining selling prices as "our greatest challenge." The need to remain competitive has been forcing many chemical companies to chop down price levels. The price decline has had its effect on the earnings of most chemical producers. But the earnings per share have not been too seriously lower than earnings in the like period last year. While some companies have been able to hold earnings per share at the same level as in the first quarter of 1962, the decreases in earnings have been only about a few cents per share. Yet, with smaller sales gains and shorter earnings, chemical companies are looking optimistically to a good 1963 both for bigger sales and better earnings. Monsanto remains "optimistic about the balance of the year"; Rohm & Haas expects 1963 sales to exceed 1962 levels "by a modest margin." Allied Chemical's president, Chester M. Brown, looks for "record sales and substantial improvement in earnings for the first half-year" compared to the first half of last year. However optimistic the chemical industry may feel about all 1963, it is unlikely, even if sales are strongly boosted, that earnings will greatly improve. The continuing pressure on prices, particularly in petrochemicals and plastics, will see to that. 22
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APRIL
2 9, 1 9 6 3
Diamond Alkali Claims Italian Acetylene Process Failed Diamond Alkali has started legal proceedings against Italy's largest chemical producer, Montecatini. Diamond Alkali charges that an acetylene process which it licensed from Montecatini had basic defects. The initial complaint was filed in the U.S. District Court for the Southern District of Texas, Houston Division, on Aug. 14, 1962. It was followed by a series of extensions for the hearing on the complaint up to March 1, 1963. In the suit Diamond alleges that Montecatini did not successfully develop a process to make acetylene a n d / or components. Another claim by Diamond is that Montecatini did not design the new process in accord with pilot plant experience. However, the suit claims, Montecatini introduced many untried and unproven innovations in the plant process and/or components. This, says the suit, was especially true of the burner, which is not similar to those observed by the plaintiff, Diamond Alkali, in Montecatini's acetylene pilot plant at Novara, Italy, in December 1959. Diamond charges that Montecatini failed to deliver a successfully proven process, and this, Diamond claims, constitutes a breach of express and implied covenants and warranties of the contract. The full amount of damages claimed by Diamond will be proved at the trial, the suit says. It is, so far, more than $2 million, according to Diamond. A Montecatini spokesman in New York said the company denies Diamond's charges. It has filed a motion in a federal court in Houston, Tex., for a stay of further proceedings pending arbitration in Switzerland. The licensing agreement between Diamond and Montecatini provides for arbitration in Zurich, Switzerland, in case of all disputes arising out of or in connection with the agreement. The Montecatini process is used at Diamond's Deer Park, Tex., acetylene plant. The process and burners, according to the Diamond suit, failed to perform at start-up, and still do not function properly. The plant, Diamond says, has never worked continuously at more than 25 to 30% of warranted capacity of 60 metric tons per day. The principal problem has been failure of the pressure burner, according to Diamond. Montecatini's position is that the agreement does not call for the process to be operating
until October 1963 at the earliest. In the Montecatini acetylene process, the charge gases (natural gas rich in methane, and oxygen of 95% plus purity) after preheating, are mixed in the pressure burner, and a partial combustion takes place. The reaction mixture is quenched with water. The cracked gases contain about 8% volume of acetylene. The over-all process is said to yield 2 3 % of acetylene.
Wiesner Says Scientists Not Free of Guilt Dr. Jerome Wiesner told the scientific community that it is not free of guilt in the Government's continuing problem with scientific public relations. "In addition to the real problems involved in very large-scale experiments/' he said at a meeting of the Federation of American Scientists in Washington, D.C., "one is confronted with many unfounded allegations associating adverse effects with experiments that are unpopular for one reason or another." Since his appointment as the President's Special Assistant for Science and Technology, Dr. Wiesner says he has been involved in a series of problems related to large-scale tests. One such is Project West Ford. This experiment involves putting a large number of fine copper dipoles into orbit. The Government, Dr. Wiesner says, conducted a series of reviews of this project by qualified scientists. The object was to assess the extent of possible adverse effects of the experiment. These reviews, he says, foresaw no adverse effects on radio or optical astronomy. Nevertheless, the experiment was changed to shorten the expected orbital lifetime of the material. Although the Government acted responsibly in planning its handling of Project West Ford, he believes, communications broke down with some of the scientific community. Also, he sees "a somewhat irresponsible attitude on the part of some scientists, who were more interested in opposing the experiment than properly informing themselves or the public as to the facts of the matter." The Government is developing more formal procedures to assure that planned large-scale experiments are studied in depth for direct and indirect adverse effects. But if these methods are to work, he says, scientists must develop a better knowledge of the complex judgments involved in deciding whether to do such experiments.
