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TOP 50 U.S. CHEMICAL PRODUCERS The economics of the CHEMICAL INDUSTRY haven’t changed much in the past year, but its structure has ALEXANDER H. TULLO, C&EN NEW YORK CITY
JUDGING BY THE DATA in C&EN’s latest survey of the Top 50 U.S. chemical producers, 2014 wasn’t a bad year by any stretch. But it was a more topsy-turvy period for chemical companies than they have seen in a while. Sales and profits slipped. At the same time, robust dealmaking left a mark on the ranking. The 50 companies combined for $323.4 billion in revenues last year, a slight, 0.5% decline from 2013. The Top 50’s sales record of $333.6 billion, hit back in 2011, still stands. Twenty-one firms posted a decline in sales, although only five saw decreases of more than 10%. Four of the five were involved with mergers and acquisitions (M&A) that reduced revenues. The 42 firms that report operating profit figures together made $39.4 billion, a 0.5% slip from the previous year. Some 23 companies experienced a decline in profits. Two companies, coal tar chemicals maker Koppers and pigments supplier Ferro, posted slight losses. The operating profit margin for the 42 firms was 14.1%, down slightly from 14.2% in 2013. Despite the lackluster financial perfor-
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mance, stock prices have held up well. The 31 public chemical firms in the ranking combined for a market capitalization of $369.7 billion at the end of 2014, a 1.9% increase from a year earlier. But the aggregate number is slightly misleading. An individual investing in a random chemical company on Jan. 1, 2014, would likely have lost money by Dec. 31. Some 22 firms saw stock prices decline. Six of them— Chemtura, FMC, Koppers, Kronos, Olin, and Stepan—saw their market value decline by more than 20%. The group’s total market capitalization rose because of the outsized influence of a few larger firms—notably Air Products & Chemicals, DuPont, and PPG Industries— that made up for declines seen at the lowervalued firms near the bottom of the ranking. Overall, the numbers in the survey reflect a chemical industry that stood its ground in 2014. Cheap natural gas feedstock continues to drive strong profits for chemical makers, and demand for chemical products has been healthy. But in 2014, the industry started to feel headwinds. Oil prices finished the year at $53 per barrel, half of what they were at
For an interactive look at the Top 50 U.S. chemical firms visit http://cenm.ag/top50us2015 CEN.ACS.ORG
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MAY 11, 2015
their peak last June. By the end of the year, chemical prices had started to fall in kind. Moreover, a strong dollar has weakened the revenues U.S. firms are reporting from their foreign subsidiaries. And the headwinds aren’t letting up. According to data released late last month by the Bureau of Economic Analysis, U.S. gross domestic product increased at an annual rate of only 0.2% during the first quarter of this year. Martha Gilchrist Moore, senior director of policy analysis and economics at the American Chemistry Council, a trade association, isn’t surprised by the numbers. An unusually cold and protracted winter disrupted retail and home sales, the stronger dollar hurt exports, and lower oil prices affected investments, especially in oil and gas drilling. But she sees the economy improving. “If you peel back the onion, there are some real good fundamentals for continued growth,” Moore says. For instance, the underlying demand for cars and houses, which are foundational chemical markets, is strong. Household formation is up. Wages are increasing. And lower prices at the fuel pump are boosting consumers’ discretionary income. Moore expects a repeat of 2014. Then, the U.S. economy shrank 2.1% in the first quarter but bounced back to a healthy 2.4% gain for the full year. LAST YEAR, according to ACC, U.S. chemi-
cal output increased 2.0%. For 2015, ACC has forecast a 3.7% increase, though Moore says that number will likely be revised slightly downward when the trade group releases its midyear forecast in June. Though the performance of the U.S. chemical industry as a whole didn’t change much in 2014, C&EN’s ranking did see movement. The ranking of the top seven firms, led once again by Dow Chemical, didn’t change. Fertilizer maker Mosaic declined from eighth to 10th. Air Products and Eastman Chemical each moved up a slot to fill the vacuum. Brisk M&A activity left a mark on this year’s ranking. Ashland declined from 15th to 22nd because it sold its water treatment chemicals business to the private equity firm Clayton, Dubilier & Rice for $1.8 billion. Other firms acquired businesses. Westlake Chemical’s purchase of German polyvinyl chloride maker Vinnolit helped lift it from 24th to 21st. A full year of Champion Technologies on Ecolab’s books assisted
TOP 50 U.S. CHEMICAL FIRMS Mergers and acquisitions impacted this year’s rankings
RANK 2014 2013
1 2 3 4 5
1 2 3 4 5
6 7 8 9 10 11 12 13 14 15 16 17 18 19
6 7 9 10 8 13 11 14 12 16 19 18 21 20
20 21 22 23 24 25 26 27 28
COMPANY
Dow Chemical ExxonMobil DuPontd PPG Industriesd Chevron Phillips
CHEMICAL CHEMICAL SALES AS SALES CHANGE % OF ($ MILLIONS) FROM TOTAL 2014 2013 SALES
$58,167 38,178 29,945 14,250 13,416
1.9% -2.2 -3.5 8.0 2.0
12,273 11,578 9,989 9,527 9,056 7,215 7,099 6,900 6,802 6,221 5,137 5,128 5,115 4,817
17 24 15 23 22 25 26 28 27
Praxaird Huntsman Corp. Air Productse Eastman Chemical Mosaicf Ecolab Honeywell Lubrizol Celanese Dow Corning Hexion Trinseo Monsantog Occidental Petroleum CF Industries Westlake Chemical Ashlande FMC Corp. Axiall Cabot Corp.e W.R. Grace Momentived Albemarle
29 30 31 32
29 30 31 32
33
--
34 35 36 37 38 39
33 36 34 37 39 35
40 41
42 38
42 43 44
40 43 47
Reichhold Rockwood Holdings Tamincoi Mead Westvaco Innospec
45
44
46 47 48
46 45 --
49 50
49 --
CHEMICAL OPERATING CHANGE OPERATING PROFIT PROFITSa FROM MARGINb ($ MILLIONS) 2013
SECTOR
100.0% 9.7 86.2 92.8 100.0
Diversified Petrochemicals Diversified Paints, inorganics Petrochemicals
$5,950 5,705 6,184 2,156 na
26.2% 10.1 18.2 15.5 na
10.2% 14.9 20.7 15.1 na
2.9 4.5 2.7 1.9 -9.2 11.4 5.0 7.8 4.5 8.9 5.1 -3.4 13.1 3.1
100.0 100.0 95.7 100.0 100.0 50.5 17.6 100.0 100.0 100.0 100.0 100.0 32.3 24.9
Industrial gases Diversified Industrial gases Diversified Fertilizers Process services Diversified Specialties Diversified Silicon chemistry Specialties Polymers Agrochemicals Petrochemicals
3,907 787 1,582 1,239 1,544 na na na 772 na 242 65 1,345 420
4.6 17.3 4.2 -36.1 -33.8 na na na -20.3 na 14.2 -54.2 28.3 -43.5
31.8 6.8 15.8 13.0 17.1 na na na 11.3 na 4.7 1.3 26.3 8.7
4,743 4,415 4,080 4,038 3,946 3,647 3,243 2,476 2,446
-13.4 17.4 -29.9 4.2 -2.4 5.3 6.0 3.3 -6.5
100.0 100.0 66.7 96.0 86.4 100.0 100.0 100.0 100.0
Fertilizers Petrochemicals Specialties Agrochemicals Petrochemicals Specialties Specialties Silicon chemistry Specialties
1,627 1,124 260 626 193 335 449 45 327
-30.9 17.9 -39.4 -11.5 -58.4 27.4 -21.4 -79.8 -46.9
34.3 25.5 6.4 15.5 4.9 9.2 13.8 1.8 13.4
NewMarket Corp. Chemtura H.B. Fullerh Cytec Industries
2,335 2,190 2,105 2,008
2.4 -1.8 2.8 3.8
100.0 100.0 100.0 100.0
Fuel additives Specialties Specialties Specialties
363 217 150 248
3.1 -10.0 -23.4 -24.8
15.5 9.9 7.1 12.4
Americas Styrenics Stepan Sigma-Aldrich Kronos Worldwide Olin Kraton Polymers Ferro Corp.d
1,992
-5.3
100.0
Polymers
74
27.3
3.7
1,927 1,671 1,652 1,306 1,230 1,112
2.5 3.0 -4.6 -7.6 -4.8 -32.0
100.0 60.0 100.0 58.3 100.0 100.0
Detergents Lab chemicals Pigments Inorganics Polymers Pigments
95 na 158 130 102 -2
-14.1 na nm -36.2 14.9 def
4.9 na 9.6 10.0 8.2 def
1,081 1,073
-0.3 -22.1
100.0 100.0
Polymers Lithium chemicals
na 154
na -28.6
na 14.4
1,058 1,041 961
-11.8 6.2 17.4
100.0 18.5 100.0
Amine chemistry Pine chemicals Fuel additives
133 242 111
-3.6 5.7 20.1
12.6 23.2 11.5
Koppers
957
5.6
61.6
-4
def
def
Innophos PolyOned Emerald Performance Materials Omnovaj Minerals Technologies
839 835 751
-0.6 -2.0 4.0
100.0 21.8 100.0
107 125 na
27.6 20.1 na
12.7 15.0 na
747 650
-3.4 -2.9
75.6 37.7
46 96
-27.9 -2.6
6.2 14.7
Coal tar chemicals Phosphates Pigments Specialties Specialties Inorganics
OPERATING IDENTIFIABLE RETURN CHEMICAL ON ASSETS CHEMICAL HEADQUARTERS ($ MILLIONS) ASSETSc
Midland, Mich. Irving, Texas Wilmington, Del. Pittsburgh The Woodlands, Texas Danbury, Conn. Salt Lake City Allentown, Pa. Kingsport, Tenn. Plymouth, Minn. St. Paul Morristown, N.J. Wickliffe, Ohio Irving, Texas Midland, Mich. Columbus, Ohio Berwyn, Pa. St. Louis Houston
$68,796 27,247 18,932 14,330 12,311 19,802 11,002 15,803 16,072 18,283 na na na 8,818 11,145 2,672 2,356 4,383 3,917
19.7 7.2 10.0 7.7 8.4 na na na 8.8 na 9.1 2.7 30.7 10.7
Deerfield, Ill. Houston Covington, Ky. Philadelphia Atlanta Boston Columbia, Md. Waterford, N.Y. Baton Rouge, La. Richmond, Va. Philadelphia St Paul Woodland Park, N.J. The Woodlands, Texas Northfield, Ill. St. Louis Dallas Clayton, Mo. Houston Mayfield Heights, Ohio Durham, N.C. Princeton, N.J.
11,338 5,214 7,151 5,341 4,991 4,084 4,095 2,884 5,223
14.3 21.6 3.6 11.7 3.9 8.2 11.0 1.6 6.3
1,232 2,667 1,869 2,767
29.4 8.1 8.0 9.0
687
10.7
1,162 na 1,643 1,618 1,083 1,097
8.1 na 9.6 8.0 9.4 def
na 5,082
na 3.0
1,963 686 1,000
6.8 35.3 11.1
984
def
728 938 na
14.7 13.3 na
536 494
8.6 19.4
Allentown, Pa. Richmond, Va. Englewood, Colo. Pittsburgh Cranbury, N.J. Avon Lake, Ohio Cuyahoga Falls, Ohio Beachwood, Ohio New York City
8.6% 20.9 32.7 15.0 na
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 Sept 30. f Fiscal year 2013 ended May 31, 2013. g Fiscal year ended on Aug. 31. h Fiscal year ended on Nov. 29. i Results for 2014 are for the first nine months. j Fiscal year ended on Nov. 30. def = deficit. na = not available. nm = not meaningful.
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MAY 11, 2015
BUSINESS
TOP 25 FOREIGN-OWNED FIRMS
MARKET CAPITALIZATION
BASF led the pack again in 2014
The value of most chemical companies tumbled last year
RANK 2014 2013
1
1 2
2 3 4 5 6 7
3 4 5 6 7
8 9 10 11 12 13 14 15 16
8 9 12 11 16 10 13 11 18
17 18 19 20 21
20 17 19 21 22
22
--
23 24
23 --
25
24
COMPANY
BASF LyondellBasell Industries Agriuma Bayer Linde Air Liquide Braskem Evonik Industries AkzoNobel Solvay Arkema PotashCorp Indorama Syngenta Alpek Sasolb Shin-Etsu Chemicalc DSM Yara Lanxess Lonza Mitsui Chemicalsc Israel Chemicals Kemira Wacker Chemie
U.S. CHEMICAL SALES ($ MILLIONS) 2014
$20,568 13,948
CHANGE FROM 2013
6.1% 6.6
U.S. CHEMICAL SALES AS % OF TOTAL U.S. SALES
RANK COUNTRY
2014
2013
100.0% 59.2
Germany The Netherlands
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
1 2 3 4 -5 6 7 8 11 14 12 10 13 15 18 17 21 19 20 23 22 24 25 30 29 28 27 32 31 33
9,702 6,552 4,574 4,542 3,881
-4.7 6.3 4.7 5.9 14.3
100.0 48.1 81.2 91.0 100.0
Canada Germany Germany France Brazil
3,072 3,066 2,967 2,750 2,623 2,600 2,578 2,544 2,380
-1.7 0.8 23.3 0.1 1.7 -3.6 -6.7 -6.9 27.2
100.0 100.0 100.0 100.0 100.0 100.0 72.0 100.0 100.0
Germany Netherlands Belgium France Canada Thailand Switzerland Mexico South Africa
2,240 1,972 1,897 1,779 1,693
24.4 -12.1 3.4 0.5 2.8
100.0 100.0 100.0 100.0 100.0
Japan Netherlands Norway Germany Switzerland
1,456
72.9
100.0
Japan
1,374 1,128
13.8 2.5
100.0 100.0
Israel Finland
1,024
3.7
100.0
Germany
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 March 31, 2014.
that company’s rise from 13th to 11th. Three companies dropped from this year’s rankings. Goodyear Tire & Rubber, 48th last year, departed because it didn’t sell enough rubber. Propylene producer PetroLogistics, 50th last year, was purchased by Koch Industries. Carlyle Group’s sale of its 47% interest in PQ Corp. preempted an initial public offering and hid that company’s results from public view. These firms have been replaced by specialty chemical maker Emerald Performance Materials, 48th, and Minerals Technologies, which makes precipitated calcium carbonate and debuts at number 50. Americas Styrenics joins the list at number 33. The company is a joint venture between Chevron Phillips and Trinseo, which went public last year and is now regularly revealing Americas Styrenics’ sales information. Telly Zachariades, a partner with The
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DuPont Dow Chemical Praxair PPG Industries Ecolab Air Products Mosaic CF Industries Eastman Chemical Celanese Ashland Westlake Chemical FMC Corp. W.R. Grace Huntsman Corp. NewMarket Corp. Albemarle Cytec Industries Axiall Cabot Corp. H.B. Fuller Chemtura Olin Kronos Worldwide Innophos Ferro Corp. Innospec Stepan Kraton Polymers Koppers Omnova
$66,916 52,798 37,482 31,436 31,271 30,908 16,776 13,164 11,273 9,168 8,299 8,119 7,602 6,954 5,545 5,004 4,690 3,278 2,981 2,825 2,240 1,773 1,762 1,509 1,257 1,128 1,038 894 661 533 385
CHANGE FROM 2013
11.1% –2.0 –2.0 19.6 –0.6 30.6 –16.7 1.2 –8.3 5.6 9.9 –0.2 –24.2 –8.7 –6.2 14.3 –7.6 –0.9 –10.1 –14.1 –14.3 –34.2 –23.1 –31.7 18.1 1.4 –7.6 –38.9 –11.7 –42.7 –10.5
NOTE: Based on share prices on Dec. 31, 2014 and Dec. 30, 2013. These 31 companies are public firms on the Top 50 list that generate more than half of their revenues through chemical manufacturing.
Valence Group, an investment bank that specializes in chemicals, expects the robust pace of M&A activity to continue into this year. Strong drivers for deal-making persist, Zachariades says. Companies that want to grow are purchasing businesses, and others are still pruning their portfolios of unwanted operations. Financing is available and is relatively cheap. And chief executives who make sensible strategic acquisitions have been rewarded with appreciating stock prices. Another driver is activist investors. Valence counts 14 firms under pressure from such proactive shareholders, the most famous example being Nelson Peltz’s attempt to thrust four directors onto DuPont’s board. Activist shareholders are believed to have instigated some deals, such as Ashland’s sale of its water treatment chemicals business. CEN.ACS.ORG
COMPANY
MARKET CAP. ($ MILLIONS) 2014
MAY 11, 2015
However, Zachariades believes the influence of these investors on M&A can be overstated. “I would probably say no more than 20% of the activity has had activists involved in some way,” he says. “It is certainly a factor in our industry but not the main driver.” By and large, the activists have catalyzed companies to act faster than they otherwise would. With or without additional M&A, C&EN’s ranking will be different next year because of previous mergers. Merck KGaA is set shortly to complete the purchase of number 35 Sigma-Aldrich. Albemarle completed its purchase of Rockwood Holdings earlier this year. Eastman bought Taminco. Newcomers will emerge as well. DuPont is set to spin off its performance chemicals business as Chemours later this year, creating a large new company that will no doubt debut near the top of next year’s ranking. ◾
