IHS Chemical Week


Chemical industry weekly news roundup, 14 February

9:59 AM MST | February 14, 2014 | By LINDSAY FROST

This Week in CW:

Earnings season is winding down as few companies reported this week. DIC (Tokyo) reports a 51.6% rise in net profits for its full fiscal year, ended 31 December 2013, compared with the previous fiscal year, to ¥26.77 billion ($263 million). Braskem's consolidated net profit was 15 million reais ($6.22 million) in the last quarter of 2013, down 95% from the fourth quarter of the year before, when net profit amounted to R$275 million. Koppers reports a net loss of $4.1 million compared to a net gain of $13.6 million in the year-ago quarter, citing restructuring costs and weakness in its carbon operations. Versalis (Milan), the chemicals subsidiary of Italy’s energy major ENI (Rome), today reported an increase in fourth-quarter operating loss on lower sales. Full-year 2013 operating loss narrowed compared with 2012 on 9% lower sales. Fertilizer major Yara International (Oslo) today announced lower fourth-quarter results, with weak commodity margins but robust value-added premiums and strong fertilizer deliveries. Fourth-quarter net income after noncontrolling interests reached 59 million Norwegian kroner ($9.6 million) compared with NK2.15 billion a year earlier. Huntsman (The Woodlands, TX) reported fourth-quarter net income of $41 million, reversing a year-ago loss of $40 million, on gains in most business segments. Mosaic reported weak results in the fourth quarter since market conditions for potash and phosphates suffered. Net earnings of $129 million dropped 80% year-on-year (YOY).

Dow Chemical has rejected a proposal by hedge fund Third Point (New York) that the company spin off its petrochemical operations. The benefits of vertical integration, scale, and shared technologies would be lost, while a significant breakup, “simplistically described as petrochemical and specialty chemical assets,” would create no additional value, says Dow. Third Point, which has reportedly invested $1.3 billion in Dow, presented its position in a 21 January letter to investors that pointed to the company’s “poor operational track record across multiple business segments, a history of underdelivering relative to management’s guidance and expectations, and the ill-timed acquisition of Rohm and Haas.” Dow’s response, issued on 11 February as an addendum to its fourth-quarter earnings presentation, does not specifically identify Third Point. However, the statement does directly address the hedge fund’s assertion that Dow should hire advisers to consider whether a spin-off of petrochemicals “would drive greater stakeholder value.”

Foster Wheeler (Zug, Switzerland), a leading engineering and construction firm, today announced that it has entered into a definitive agreement with AMEC (London) under which AMEC will make a recommended offer worth $3.3 billion to acquire all the issued and to be issued share capital of Foster Wheeler. The companies announced last month that they were in exclusive talks on a business combination. AMEC will offer, for each outstanding share of Foster Wheeler common stock, a consideration consisting of 0.8998 shares of AMEC stock and $16.00 in cash. Separately, Foster Wheeler expects to pay a one-time dividend of $0.40/ share prior to the closing of the offer.

Around the Web:

Reuters reports that US manufacturing output unexpectedly fell in January, recording its biggest drop in more than four and a half years, as cold weather disrupted production in the latest indication the economy got off to a weak start this year.Though consumer sentiment was steady in early February, there are worries the harsh weather, which has persisted in many parts of the country, could dampen the morale of households when it starts to stretch budgets through high bills for heating. Factory production fell 0.8% last month, the Federal Reserve said on Friday. It was the first drop since July and the biggest since May 2009, when the economy was still locked in recession. Output had increased 0.3% in December.

While the debate over using crops for fuel continues, scientists are now reporting a new, fast approach to develop biofuel in a way that doesn’t require removing valuable farmland from the food production chain. Their work examining the fuel-producing potential of Streptomyces, a soil bacterium known for making antibiotics, appears in The American Chemistry Society’s (ACS’) The Journal of Physical Chemistry Letters. The method also could help researchers identify other microbes that could be novel potential fuel sources. Ariane Deniset-Besseau and colleagues point out that with the rise in oil prices in recent years, the search has been on for alternative fuels. Though plants such as soy and corn have been popular, the honeymoon ended as people realized how much arable land they were taking up. So now, researchers are seeking additional sources, including bacteria. Streptomyces has become a candidate in this search. It can make and store large amounts of oils called triacylglycerols (TAGs), which are direct precursors of biodiesel.

The Bank of England on Wednesday abandoned its six-month-old strategy of pledging to consider raising interest rates only when unemployment falls to 7%, saying it would now take a number of factors into account, the New York Times reports. Mark J. Carney, the governor of the Bank of England, also stressed that higher interest rates were still some way off and that any increase would be gradual. The central bank also raised its growth forecast for 2014 again, to 3.4% from 2.8% which it had forecast in November.

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