IHS Chemical Week


Specialty Chemical Weekly News Roundup: July 1-July 7

5:16 AM MDT | July 7, 2011 | By KERRI WALSH

 Specialty chemical producers continue to make investments in M&A to ensure growth and capital expenditures to keep up with demand. AkzoNobel  plans to invest €110 million ($159.1 million) to build a hi-tech decorative paints manufacturing facility in the north-east of England. The company declined to reveal the exact location until it completes discussions with local authorities but says it will be within 25 miles of its existing site at Prudhoe. The plant will enable the company to deliver the most efficient supply chain operations, reduce operating working capital and accelerate its response to changing market and customer demands, the company says. It is scheduled to be operational by the end of 2014. A small share of the investment is expected to be financed through local grants. The plans include a proposal to close AkzoNobel's Prudhoe site and its manufacturing operations in Slough in three-and-a-half years' time and will be put forward to employees for consultation. Production would be maintained at the required levels prior to operations being transferred. 

MEMC Electronic Materials (St. Peters, MO) says its MEMC Singapore subsidiary has entered into a partnership agreement with Jusung Engineering (Gwangju, Korea), to build and operate a high-efficiency solar cell production facility. Jusung is Korea’s largest process technology solutions provider for semiconductors, flat panel displays, solar, OLED and LED lighting, MEMC says. The strategic partnership will be a 50-50 joint venture between Jusung and MEMC, and the initial 100MW of capacity is expected to begin commercial production in the first half of 2012, MEMC says. The jv is expected to require upfront capital of $16 million each from both companies, MEMC says.

Honeywell plans to invest $33 million in its Baton Rouge, LA manufacturing facility to produce its new low-global-warming-potential hydrofluoroolefin (HFO) blowing agent and propellant, HFO-1234ze, on a commercial scale. Production of HFO-1234ze at Baton Rouge is scheduled to begin in late 2013.

W.R. Grace has acquired the De Neef Conchem Group (Heist-Op-Den-Berg, Belgium), a privately held group of companies that develop waterproofing products for the construction industry. Financial terms of the transaction were not disclosed. De Neef produces preventative and remedial waterproofing products and concrete protection and repair products. The company has production in Belgium, Spain and the U.S. "De Neef Conchem's product lines complement Grace's structural waterproofing and building envelope portfolio by adding a variety of new technologies," says Andrew Bonham, president of Grace Construction Products. Grace says it has also recently acquired Wuhan Meilixin New Building Materials Co., a manufacturer of waterproofing products located in China.

Dow Chemical was rumored to buy Yule Catto earlier this week, but Yule Catto did not comment published reports concerning the deal.

While investments in the specialty chemical market continue to be announced, warnings about the second-half outlook for the sector are beginning to trickle out. A. Schulman reaffirmed its prior full-year 2011 net income guidance of $57-$62 million, but cautioned results may be in the lower end of the range.  "The guidance range reflects our current view of customer demand, and our commitment to delivering upon our global growth strategies," Gingo says. “While we are confident with this range, we proceed with a sense of caution given the continuous flow of outside economic data that is signaling global economic softness as we approach our next fiscal year.  The uncertainty in the nature and timing of this softness leads us to view the lower end of our range with a higher degree of confidence.” The announcement follows AkzoNobel's warning last month that it does not expect to meet its full-year 2011 Ebitda target.  Schulman’s fiscal 2010 net income was $48.2 million. 

Schulman reported net income of $18.8 million in its fiscal third quarter ended May 31, down 27% in the same period last year. Excluding charges in each period,  earnings increased 49%, to $20.3 million (65 cts/share). The consensus of analysts’ estimates was 64 cts/share, as reported by Thomson One (New York). Sales rose 45%, to $611.1 million, largely due to the addition of ICO, which Schulman acquired during the third quarter 2010. 

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