Chemical industry weekly news roundup, 27 June
9:44 AM MDT | June 27, 2014 | By LINDSAY FROST
This Week in CW:
IHS Chemical's annual Polyethylene Polypropylene Chain Global Business Forum (PEPP) took place in Zurich this week. Asia will remain the main demand region for polyolefins, and its share of worldwide polyolefin consumption will exceed 50% by 2020, with China representing well over half of this share, says Ajay Shah, senior executive v.p./chemicals at Reliance Industries at a presentation. India's polyolefin demand, although far behind that of China, is expected to be about 10 million m.t./year by 2020, representing 10% of total Asian demand. Europe's olefins and polyolefins industry needs to improve its feedstock flexibility while continuing to innovate and create opportunities, since it faces growing competition from other regions, says Daniele Ferrari, president and CEO of Versalis. The energy cost position of Europe's petrochemicals and plastics industry is also central to maintaining its competitiveness in the medium and long terms. The future of Europe's polyolefin value chain lies in making it inclusive of future generations of employees, says Koos van Haasteren, executive v.p. at Sabic Europe. Van Haasteren said that the polyolefin and wider petrochemical industry needs to attract young minds that will pursue technology development, and will help the industry to leverage sustainability-related opportunities.
Monsanto on Thursday reported fiscal third-quarter net income down 5.6% year-on-year (YOY), to $858 million, on sales that were roughly flat YOY, at $4.25 billion. Earnings totaled $1.62/share, down 2.4% but ahead of analysts' consensus estimate of $1.56/share, as reported by Thomson Reuters (New York). Increased profitability in both the seeds and genomics and agricultural productivity businesses drove the better-than-expected earnings. Monsanto's fiscal third quarter ended on 31 May. On Monday, FMC announced that it is cutting its second-quarter and full-year earnings guidances, to 95 cts–$1.05/share and $4.10–4.30/share, respectively. The decreases are about 9.1% for the second-quarter guidance and about 5.6% for the full-year guidance. The cuts are due to persistent weakness in the company’s agricultural solutions segment, which is now expected to increase revenue and earnings increases by “mid-single digits,” the company says. DuPont also revised its second-quarter and full-year earnings outlook, citing a lower-than-expected quarterly performance from its agriculture segment and, to a lesser extent, its performance chemicals unit. The company expects second-quarter earnings to fall “moderately below” the $1.28/share recorded in the year-ago quarter, and lowered its 2014 earnings forecast to $4–4.10/share, down from the $4.20–$4.45/share guidance announced 17 April.
Engineering and construction firms SNC-Lavalin Group (Montreal, Canada) and Kentz Corp (St Helier, Jersey, Channel Islands) have announced an agreement for SNC-Lavalin to buy Kentz for £1.164 billion ($2 billion) in cash. The directors of Kentz, who have been advised by Investec, intend unanimously to recommend that Kentz shareholders vote in favor of the acquisition.
A. Schulman has named Bernard Rzepka as its next CEO, effective 1 January 2015. Current chairman and CEO Joseph Gingo will remain chairman after his retirement as CEO on 31 December 2014. Rzepka was named executive v.p. and COO of the company in April 2013. He has also served in a variety of global management and technology positions, including v.p. and general manager/Europe, Mideast, and Africa; head/engineered plastics business, Europe; head/masterbatches business; and managing director/Germany.
Around the Web:
According to Institutional Investors Alpha, total assets in the hedge fund industry raced past $3 trillion for the first time in its history. A new study from data tracker eVestment says the asset growth is driven by investor flows, which are at the highest level since the beginning of 2007. Some $22 billion of the new capital was added to hedge funds in May, bringing the total flows to $93.3 billion for the year-to-date—the largest five-month total to begin a year since 2007. Performance gains kicked in $37.8 billion to total assets under management in May.
Ukraine and the European Union (EU) have signed the economic chapter of the Association Agreement, which envisages the creation of a free trade area, provides political association and economic integration of Ukraine with the EU, according to INP Software. By signing the agreement, the Ukrainian government committed itself to implementing reforms that will include constitutional, judiciary reform, and the respect for minority rights, among others.
Bank of England governor Mark Carney has suggested the “new normal” for interest rates is likely to be about 2.5% when rates start to increase. Speaking to BBC Radio 4′s Today program he also suggested the rates could reach this level in early 2017, written in The Next Gallery. Carney suggested a return to “normal” interest rates of 5% was unlikely in the medium term. He said things had changed to the point that it was almost impossible to raise rates to their pre-recession level. He also added that rate rises would be more gradual and limited than in the past.