Shrinking Margins Push Down Profits - C&EN Global Enterprise (ACS

Nov 6, 2010 - Sales of leading chemical firms pretty well held their own last year, edging upward for many companies to all-time highs. (Total industr...
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CHEMICAL & ENGINEERING

NEWS VOLUME 39, NUMBER 6

Tfo Chemical World This Week

FEBRUARY 6, 1961

Shrinking Margins Push Down Profits Sales held their own last year, but chemical companies' profits stumbled over higher costs, sharper competition Sales of leading chemical firms pretty well held their own last year, edging upward for many companies to alltime highs. (Total industry sales in­ creased about 9%, according to the Department of Commerce. ) But prof­ its wilted more often than not, and profit margins were generally squeezed, after widening in 1959, un­ der the impact of rising costs and stiffer competition. The pattern that is likely to be fol­

lowed by the flood of annual reports now being issued by chemical firms already shows up distinctly in the early returns. Company officials are clearly concerned about the earnings squeeze. Margins are "too narrow" on some products, Hercules Powder president Albert E. Forster warns, because of constantly increasing costs of research and operations and the pressure of domestic and foreign competition. Hercules vice president Ε. Β. Morrow

poses the question of whether industry will continue to expand "in the face of a price structure that does not yield an adequate return on operating assets." Coupled with higher costs, a down­ ward pressure on prices also has had a sharp effect on earnings. Although the over-all wholesale price index of chemicals and allied products re­ mained practically unchanged during 1960, prices of many plastics and

Sales Held Up Better Than Profits Last Year Net Sales (Millions) Air Reduction Allied Chemical American-Marietta' Catalin Diamond Alkali Eagle-Picher Freeport Sulphur Hercules Powder Heyden Newport Hooker Chemical6 Koppers Monsanto National Distillers Nopco Chemical Norwich Pharmacal Rayonier Rohm & Haas Smith Kline & French Stauffer Union Carbide « Includes b For year c Excludes à Excludes

$ 202.5 765.8» 368.1 19.3 138.3 120.8 53.0 336.9° 60.8 149.8 302.5 890.5 580.2 39.9 45.2 129.1 218.2 144.5 219.8 1,548.2

Change Net from Income 1959 (Millions)

+1% +6 +14 -13 +