CHEVRON PHILLIPS
BUSINESS
sell all their new production when they start up their capacity will depend on the extent export markets will present matching demand. An oil price decline could undermine the advantage that U.S. producers are now enjoying. Peterson says there is a 25% chance in the coming years that the price of oil will drop to about $75 per barrel. “There’s also a 25% risk that the price could go up to $150,” he notes. FLATLAND
Chevron Phillips Chemical is starting construction on a new ethylene cracker at its Cedar Bayou plant in Baytown, Texas.
TOP 50 U.S. CHEMICAL PRODUCERS The largest chemical firms posted another STRONG YEAR in 2013 ALEXANDER H. TULLO, C&EN NORTHEAST NEWS BUREAU
THE BATTERY OF DATA in C&EN’s annual
ranking of the Top 50 U.S. chemical companies shows an industry in excellent health. All the right numbers—sales, profits, profitability, and stock prices—headed upward in 2013, the period covered by the survey. Cheap shale gas and a robust domestic economy are combining to give U.S. chemical producers a lift. And nothing indicates that the trends will turn against the industry anytime soon. Combined, the 50 firms posted a 1.1% increase in sales in 2013, to $321.9 billion. Though higher than 2012, the mark is still short of the record of $333.6 billion the industry tallied in 2011. Although 20 firms reported a decline in sales, only a handful of the declines were more than 10%. Fertilizer makers Mosaic and CF Industries posted reductions on weak prices. Chemtura and Rockwood Specialties also put up sharply lower revenue numbers, but this is because they have been aggressively selling off businesses to fine-tune their portfolios. For the 42 firms that publicly report profit figures, combined results showed a 7.0% gain over 2012 for a total of $41.8 billion. This beats the earnings record of 2011, which totaled $39.6 billion. No company reported a loss. But 19 firms posted a decline in profits. Eight firms saw increases of more than 50%. Three of these—Eastman Chemical, Monsanto, and Cytec Industries—more than
doubled profits. Ferro Corp. saw its results swing from losses in 2012 to gains in 2013. Operating profit margins—profits divided by sales—also climbed for the 42 firms. They reached 14.6%, an improvement from the 13.8% the industry racked up in 2012. For the past few years, petrochemical firms have been flying high because of shale gas. Cheap ethane and propane feedstocks derived from shale formations have given U.S. petrochemical makers an edge over most foreign competitors, which primarily derive petrochemicals from oil. A number of risks could bring the good times to an end for U.S. petrochemical makers, but they aren’t rising to a level of serious challenges, says Frederick M. Peterson, president of Probe Economics, a consulting firm that focuses on the chemical industry. Peterson says the main risks to the chemical boom come from feedstock availability, excess petrochemical capacity, and a sharp decline in oil prices. Feedstock availability will depend on geology and how quickly new capacity will absorb the hydrocarbons coming out of the ground. Whether chemical makers will be able to
BUT SHALE ISN’T the only game in the
U.S. chemical town. A relatively strong U.S. economy is ensuring that petrochemical makers don’t have a monopoly on profitability. Pure petrochemical makers such as Westlake Chemical and PetroLogistics are racking up profit margins in excess of 15%, but so are fertilizer makers such as Mosaic and CF, diversified players such as Eastman, industrial gas makers such as Praxair and Air Products & Chemicals, and specialty chemical producers such as FMC Corp., Cytec, and Albemarle. Stock prices also reflect prosperity shared across the chemical industry. This year, C&EN ranked some 33 firms by market capitalization. As a group, value jumped by 25.7%, to $349.8 billion. DuPont, which led the market capitalization ranking for three years, posted a 43.5% increase this year to maintain its lead over number-tworanked Dow Chemical, which posted a 37.6% increase. Bets on a couple of firms paid off enormously. Axiall’s value more than doubled during the year. Ferro’s stock price tripled. Speaking in March at the IHS World Petrochemical Conference, Paul A. Smith, who heads chemical investment banking at Citi, said Wall Street has been rewarding three types of chemical firms. “The companies with the strongest stock price performance over the last couple of years are those with the most exposure to the shale gas advantage,” he said, noting that the category includes LyondellBasell Industries, Westlake, and Huntsman Corp.
Cheap shale gas and a robust domestic economy are combining to give U.S. chemical producers a lift. CEN.ACS.ORG
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MAY 19, 2014
TOP 50 U.S. CHEMICAL FIRMS Companies posted solid results in 2013
RANK 2013 2012
COMPANY
1 2 3 4 5
1 2 3 4 5
Dow Chemical ExxonMobil DuPontd PPG Industriesd Chevron Phillips
6 7 8 9 10
6 7 8 9 10
11 12 13 14 15 16 17 18 19
13 12 19 17 14 15 16 18 —
20
20
21 22 23 24 25 26 27 28
22 28 21 23 24 25 27 —
29 30 31 32 33
30 29 32 31 35
Praxaird Huntsman Corp. Mosaice Air Productsf Eastman Chemical Honeywelld Celanese Ecolab Lubrizol Ashlandf Dow Corning CF Industries Trinseo Momentive Specialty Chemicals Occidental Petroleum Monsantog Axiall FMC Corp. Westlake Chemical Cabot Corp.f W.R. Grace Albemarle Momentive Performance Materialsd NewMarket Corp. Chemtura H.B. Fullerh Kronos Worldwide Cytec Industries
34 35
33 34
36 37 38
36 38 26
39 40 41 42 43 44 45 46 47 48 49 50
37 41 — 40 43 42 49 46 47 39 44 48
CHEMICAL CHEMICAL OPERATING CHEMICAL OPERATING CHEMICAL SALES AS CHEMICAL PROFITS AS IDENTIFIABLE ASSETS RETURN SALES CHANGE % OF OPERATING CHANGE % OF TOTAL OPERATING CHEMICAL AS % OF ON ($ MILLIONS) FROM TOTAL PROFITSa FROM OPERATING PROFIT ASSETS TOTAL CHEMICAL 2013 2012 SALES HEADQUARTERS ($ MILLIONS) 2012 PROFIT MARGINb ($ MILLIONS) ASSETS ASSETSc
$57,080 39,048 31,044 14,044 13,147
0.5% 0.8 2.7 -0.9 -1.2
100.0% 9.3 86.9 93.0 100.0
11,925 11,079 9,974 9,729 9,350
6.2 -1.0 -10.2 5.8 15.4
100.0 100.0 100.0 95.6 100.0
Midland, Mich. Irving, Texas Wilmington, Del. Pittsburgh The Woodlands, Texas Danbury, Conn. Salt Lake City Plymouth, Minn. Allentown, Pa. Kingsport, Tenn.
$4,715 5,180 5,234 2,134 na 3,734 671 2,333 1,518 1,938
6,764 6,510 6,476 6,400 5,817 5,711 5,475 5,307 4,890
9.4 1.4 25.5 4.9 -5.8 -6.7 -10.3 -3.5 2.8
17.3 100.0 48.9 100.0 74.5 100.0 100.0 100.0 100.0
Morristown, N.J. Irving, Texas St. Paul Wickliffe, Ohio Covington, Ky. Midland, Mich. Deerfield, Ill. Berwyn, Pa. Columbus, Ohio
4,673
2.0
19.1
4,521 4,042 3,875 3,760 3,463 3,061 2,616 2,398
21.7 50.5 3.4 5.3 4.9 -3.0 -4.7 1.7
30.4 86.6 100.0 100.0 100.0 100.0 100.0 100.0
St. Louis Atlanta Philadelphia Houston Boston Columbia, Md. Baton Rouge, La. Waterford, N.Y.
1,048 464 707 954 263 571 616 223
119.7 53.7 1.5 54.9 -9.3 1.2 19.0 16.8
30.3 99.4 100.0 100.0 100.0 100.0 100.0 100.0
23.2 11.5 18.2 25.4 7.6 18.7 23.6 9.3
4,418 5,221 5,235 4,061 4,233 5,396 3,585 2,694
21.4 88.8 100.0 100.0 100.0 100.0 100.0 100.0
23.7 8.9 13.5 23.5 6.2 10.6 17.2 8.3
2,280 2,231 2,047 1,943 1,935
3.1 -15.1 8.5 -1.7 13.3
100.0 100.0 100.0 100.0 100.0
352 241 196 553 330
-3.7 -30.7 20.3 46.8 108.9
100.0 100.0 100.0 100.0 100.0
15.4 10.8 9.6 28.5 17.0
1,327 2,704 1,873 2,027 2,681
100.0 100.0 100.0 100.0 100.0
26.5 8.9 10.4 27.3 12.3
Stepan Ferro Corp.d
1,881 1,635
4.3 -7.5
100.0 100.0
110 153
-14.4 nm
100.0 100.0
5.9 9.4
1,167 1,008
100.0 100.0
9.4 15.2
Sigma-Aldrich Olin Rockwood Specialties Kraton Polymers Taminco PQ Corp.i Reichhold MeadWestvaco Koppers PolyOned Innophos Innospec Goodyear Omnovah PetroLogistics
1,622 1,412 1,378
3.1 0.1 -51.1
60.0 56.2 100.0
Richmond, Va. Philadelphia St. Paul Dallas Woodland Park, N.J. Northfield, Ill. Mayfield Heights, Ohio St. Louis Clayton, Mo. Princeton, N.J.
na 204 216
na -22.6 -40.4
na 57.1 100.0
na 14.4 15.7
na 1,696 5,532
na 60.5 100.0
na 12.0 3.9
1,292 1,200 1,090 1,084 980 906 852 844 819 782 773 758
-9.2 7.5 0.5 -6.7 4.4 -18.1 9.5 -2.1 5.5 -38.0 -10.6 0.9
100.0 100.0 100.0 100.0 18.2 61.3 22.6 100.0 100.0 4.0 75.9 100.0
Houston Allentown, Pa. Malvern, Pa. Durham, N.C. Richmond, Va. Pittsburgh Avon Lake, Ohio Cranbury, N.J. Englewood, Colo. Akron, Ohio Fairlawn, Ohio Houston
88 138 na na 229 44 104 84 92 na 64 223
-13.3 15.0 na na 2.2 -47.2 55.7 -23.7 -7.6 na -28.5 54.4
100.0 100.0 na na 42.4 43.8 33.1 100.0 100.0 na 80.4 100.0
6.8 11.5 na na 23.4 4.8 12.2 9.9 11.2 na 8.3 29.4
1,195 1,856 na na 555 536 962 745 795 na 548 770
100.0 100.0 na na 10.3 74.9 32.7 100.0 100.0 na 64.1 100.0
7.4 7.4 na na 41.3 8.2 10.8 11.3 11.6 na 11.7 28.9
Los Angeles
6.6% 6.0 11.6 -3.0 na
100.0% 9.1 97.5 97.4 na
8.3% 13.3 16.9 15.2 na
7.9 -27.9 -12.8 -4.0 110.7
100.0 100.0 100.0 95.9 100.0
31.3 6.1 23.4 15.6 20.7
1,271 969 na na 429 na 2,354 141 212
10.1 66.2 na na -31.7 na -20.5 -8.7 -22.6
20.0 100.0 na na 59.3 na 100.0 100.0 100.0
743
3.2
$69,501 27,475 18,113 11,900 10,533
100.0% 7.9 66.2 75.0 100.0
6.8% 18.9 28.9 17.9 na
20,255 9,188 18,086 16,162 11,845
100.0 100.0 100.0 90.5 100.0
18.4 7.3 12.9 9.4 16.4
18.8 14.9 na na 7.4 na 43.0 2.7 4.3
6,827 9,018 na na 9,374 12,302 10,678 2,575 2,866
15.0 100.0 na na 77.5 100.0 100.0 100.0 100.0
18.6 10.7 na na 4.6 na 22.0 5.5 7.4
7.7
15.9
3,947
5.7
18.8
a Operating profit is sales less administrative expenses and cost of sales. b Operating profit as a percentage of sales. c Chemical operating profit as a percentage of identifiable assets. d Sales include a significant amount of nonchemical products. e Fiscal year ended on May 31. f Fiscal year ended on Sept. 30. g Fiscal year ended on Aug. 31. h Fiscal year ended on Nov. 30. i C&EN estimates based on nine-month results. na = not available. nm = not meaningful.
CEN.ACS.ORG
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MAY 19, 2014
BUSINESS
TOP 25 FOREIGN-OWNED FIRMS
MARKET CAPITALIZATION
Companies from the developing world were big gainers in 2013
DuPont led the pack for the fourth year in a row
RANK 2013 2012
1 2
1 2
3 4 5 6 7
3 4 6 5 7
8 9 10 11 12 13 14 15
8 12 10 9 14 11 18 15
16 17 18 19 20
13 19 20 16 22
21 22 23 24
17 21 23 24
25
—
COMPANY
BASF LyondellBasell Industries Agriuma Bayer Linde Air Liquide Evonik Industries AkzoNobel Indorama Alpek Solvay Syngenta Arkema Braskem Nova Chemicals Potash Corp. DSM Sasolb Yara Shin-Etsu Chemicalc Lanxess Lonza Israel Chemical Wacker Chemie Clariant
U.S. CHEMICAL SALES ($ MILLIONS) 2013
CHANGE FROM 2012
$19,353 13,089
0.9% 1.2
U.S. CHEMICAL SALES AS % OF TOTAL U.S. SALES
RANK
COUNTRY
100.0% 59.7
Germany Netherlands
10,181 6,155 4,363 4,283 3,121
-5.5 0.9 34.5 3.8 -3.0
100.0 47.9 84.3 94.1 100.0
Canada Germany Germany France Germany
3,037 2,851 2,848 2,782 2,762 2,753 2,643 2,642
-5.2 3.6 -5.9 -9.9 7.2 -5.4 25.8 14.4
100.0 100.0 100.0 100.0 71.8 100.0 100.0 100.0
Netherlands Thailand Mexico Belgium Switzerland France Brazil Canada
2,580 2,267 2,120 1,965 1,951
-2.6 16.3 12.6 -11.9 19.3
100.0 100.0 100.0 100.0 100.0
Canada Netherlands South Africa Norway Japan
1,769 1,626 1,207 986
-17.3 -10.9 -3.6 -9.2
100.0 100.0 100.0 100.0
Germany Switzerland Israel Germany
954
5.4
100.0
Switzerland
NOTE: Figures from companies that report in native currencies were converted to dollars at average annual exchange rates from the Federal Reserve. a Sales include a significant amount of nonchemical products. b Fiscal year ended on June 30. c Fiscal year ended on March 31.
Companies with high exposure to the housing recovery, such as paint maker PPG Industries, have also been strong. Additionally, specialty chemical makers that have been able to demonstrate strong and consistent profit growth are also being sought after by investors. Smith mentioned Ecolab and FMC as examples. C&EN’s Top 50 ranking this year showed little evidence of merger and acquisition activity. The list has the same top 10 players—headed by Dow—in the same order as it did a year ago. No deal among this group left much of a mark. Further down in the list, examples of major changes are scarce. Axiall, formed from the merger in early 2013 of Georgia Gulf with PPG’s chlorine business, posted a greater than 50% sales gain and a jump in the ranking from 28th to 22nd. Ecolab got a bump from its purchase of oil chemical supplier Champion Technologies. OM Group was dropped from the list because
2013
2012
1 2 3 4 5 6 7 8
1 2 3 5 6 4 7 8
9 10 11 12
9 10 11 14
13 14 15 16
15 12 17 16
17 18 19 20 21 22 23 24 25
13 18 25 20 19 22 23 24 21
26 27 28 29 30 31 32
— 26 28 32 27 29 30
COMPANY
DuPont Dow Chemical Praxair PPG Industries Air Products Mosaic CF Industries Eastman Chemical Sigma-Aldrich FMC Corp. Celanese Westlake Chemical W.R. Grace Ashland Huntsman Corp. Rockwood Specialties Albemarle NewMarket Corp. Axiall Cabot Corp. Cytec Industries Chemtura H.B. Fuller Olin Kronos Worldwide PetroLogistics Stepan Innospec Ferro Corp. Innophos Koppers Kraton Polymers Omnova
MARKET CAP ($ MILLIONS) 2013
$60,227 53,515 38,242 26,287 23,664 20,137 13,004 12,299
CHANGE FROM 2012
43.5% 37.6 18.0 26.4 35.7 -16.5 1.6 17.4
11,187 10,029 8,678 8,142
26.7 24.5 22.1 53.5
7,613 7,550 5,914 5,653
49.8 18.8 56.1 45.6
5,078 4,377 3,316 3,310 3,307 2,694 2,618 2,291 2,208
-8.1 24.6 132.8 30.0 7.0 29.3 50.7 32.3 -2.3
1,622 1,464 1,123 1,112 1,064 929 749
-13.8 19.8 39.8 207.6 5.0 18.2 -3.5
divestitures made it too small. Only one other company 33 33 430 30.8 dropped from the list this NOTE: Based on share prices on Dec. 31, 2013, and Dec. 30, 2012. These year, Emerald Performance 33 companies are firms on the Top 50 list that generate more than half of their revenues through chemical manufacturing. Materials, which was 50th last year. Its $755 million in sales were just not enough to water treatment business. Dow, under meet the bar. pressure from Third Point, has put up for There were only a few additions. C&EN sale its chlorine-related businesses. This is considered Momentive as two separate a $5 billion enterprise that would be in the companies—Momentive Specialty Chemiupper half of C&EN’s ranking. So would cals and Momentive Performance MateriDuPont’s performance chemicals unit, als because the latter declared bankruptcy. which the company is spinning off. DuPont Silicas supplier PQ Corp. filed for an initial is being pushed to restructure by Trian public offering and is now publicly disclosFund Management. ing its financial results. Citi’s Smith said the 20% average reMerger and acquisition activity could turns that activist funds earn for their pick up pace, driven in large measure by investors will mean that they will increasactivist investor hedge funds that have ingly attract more capital and target more the chemical industry in their sights. Jana companies. “This will continue to be a Partners has instigated some of Ashland’s theme through 2014 and possibly beyond,” portfolio moves, such as the sale of its he said. ◾ CEN.ACS.ORG
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MAY 19, 2014
