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Specialty Chemicals Roundup; August 12-18
4:48 AM MDT | August 18, 2011 | By KERRI WALSH
Late reporting specialty chemical makers say raw material costs were a drag on earnings during the second quarter. Valspar reported net income of $67.4 million in its fiscal third quarter ended July 29, down 10% from the same period last year. The 2011 quarter included a 10 cts/share restructuring charge, while the 2010 period included an 8 cts/share gain on the sale of assets and a 4 cts/share restructuring charge. Excluding charges and gains in each period, reported earnings were 80 cts/share, compared with 70 cts/share in the year-ago quarter, and in line with the consensus of analysts’ estimates, as reported by Thomson Reuters (New York). Sales rose 23%, to $1.07 billion. Valspar says raw material costs continue to rise.
"In recent quarters, we have witnessed a significant global trend of raw materials prices increase, including in many of the raw materials used by Frutarom in the manufacture of its products,” says president and CEO Ori Yehudai. “This trend seems to have moderated somewhat in recent weeks. The actions that we took to protect our profitability, the pricing update that we performed, and our continuous efforts to improve our efficiency, have enabled us maintaining the profitability level that characterized our activity in the recent years,” Yehudai says.
Flavors and flavors producer Frutarom reported second quarter net income down 5%, to $12.3 million, and operating income down 12%, to $17 million because of high raw material costs. Sales rose 14%, to $131 million as a result of economic recovery during the quarter and customer restocking.
Arkema and CJ Cheil-Jedang (Seoul) have selected Kerteh, Malaysia to build their previously announced bio-methionine and thiochemicals plants, following an investigation of sites in Malaysia and Thailand. The companies say that attractive conditions offered by the Malaysian government, as well as the Malaysian Biotechnology Corporation and the East Coast Economic Region Development Council, have persuaded the partners to invest in Malaysia. Arkema and CJ Cheil-Jedang plan to start operations at the plants at the end of 2013.
Lubrizol says it will upgrade its existing additives testing capabilities at Mumbai, India. Renovations will include the consolidation of several existing labs into a modern lab facility capitalizing on synergistic resources, purchase of new testing equipment, and other new equipment to broaden overall testing capabilities. Completion is targeted for mid 2012. This will help meet the significant increase in demand for lubricant testing expected to occur in India within the next five years, the company says.