IHS Chemical Week


Chemical industry weekly news roundup, 8 August

9:53 AM MDT | August 8, 2014 | By LINDSAY FROST

This Week in CW:

Companies continued reporting results this week as earnings season slows down. Axiall (Atlanta) says that weakness in chlor-alkali and an unplanned outage in vinyl chloride monomer (VCM) pushed second-quarter net income down 62% year-over-year (YOY), to $27.2 million, and that sales fell 3% YOY, to $1.237 billion. Agrium reports net earnings of $625 million for the second quarter, down 15% year-over-year (YOY) with earnings per share of $4.34/share surpassing analyst estimates of $4.11/share, as compiled by Thomson Reuters (New York). CF Industries says net earnings of $312.6 million for the second quarter were down 37% year-over-year (YOY) on sales of $1.5 billion down 12% YOY. Earnings per share of $6.10/share were below analyst consensus of $6.71/share, according to Thomson Reuters (New York). Brenntag posted second-quarter profit after tax of €81 million, up 17% compared with the corresponding period of last year, on sales down almost 2%, to €2.5 billion. Gross profit was flat year-on-year (YOY) at €502 million. Toray Industries reports an 11% rise in net profits for the company’s fiscal first quarter ended 30 June 2014, compared with the year-ago period, to ¥14.71 billion ($144 million). First-quarter sales increased 11.4%, to ¥448.62 billion. Lanxess announced its second-quarter results and detailed a previously announced restructuring program. Second-quarter net income rose to €55.0 million ($73.5 million) from €9.0 million in the year-earlier quarter.

Kraton Performance Polymers announced that on 6 August, its board of directors withdrew its prior recommendation that Kraton's stockholders approve the merger with the styrenic block copolymer (SBC) operations of LCY Chemical (Taipei). Plans for the merger were first announced on 28 January and would have created a leading worldwide manufacturer of SBC, with more than $2 billion in annual revenue. Kraton had notified LCY on 30 June that it intends to withdraw its recommendation unless the parties could agree upon mutually acceptable revised terms of the agreement. The Kraton board had cited declines in the operating results of LCY’s SBC business in the first quarter of 2014 and in its results outlook, together with a related decline in Kraton’s stock price and negative reactions from stockholders following Kraton’s announcement on 24 June that a merger with the SBC operations of LCY may take two years longer to pay off than originally expected.

Platform Specialty Products (Miami), formed by the acquisition of specialty chemical maker MacDermid, has agreed to acquire crop protection chemicals maker Agriphar (Ougree, Belgium) for €300 million ($400 million). This deal, when combined with Platform’s recently announced $1-billion acquisition of Chemtura AgroSolutions’ (CAS) business, gives the company a significant foothold in agrochemicals, Platform says. Agriphar posted 2013 revenue of €127 million and adjusted Ebitda margin slightly above 20%, Platform says. Agriphar produces total and selective herbicides for crops such as tomatoes, potatoes, soya beans, and onions. The company also makes fungicides, insecticides, and growth regulators with end markets primarily across Europe, the company says.

Around the Web:

A piece in the Boston Globe discusses shareholder values and its risk to business. Shareholder value sounds like great management philosophy—but critics say we need to get back to a broader vision of the purpose of corporations. Experts on the history of business say the Market Basket saga is a window onto something deeper than a power struggle among the Demoulas clan that owns it. They see it as emblematic of a war over the future of the American corporation—what its purpose is, how it should be run, and whom it should be engineered to benefit. They argue that maximizing profit and shareholder value—an approach to running companies that drives investment on Wall Street and serves as the closest thing to modern management gospel—is only one way of defining corporate success, and a fairly new one at that.

US productivity rebounded in second quarter as wage inflation was muted, writes Reuters. US nonfarm productivity rebounded more strongly than expected in the second quarter, putting a lid on wage pressures and giving the Federal Reserve room to keep interest rates low for a while. The Labor Department said on Friday productivity increased at a 2.5% annual rate after contracting at a revised 4.5% pace in the first quarter, which was the fastest decline since the fourth quarter of 1981.

The Guardian covers green energy in the US this week. The corporatization of US green energy is a double-edged sword worth billions. As tax breaks and incentives for renewable energy increase, corporations are entering the green energy landscape. As the materials for producing wind and solar energy become cheaper, tax breaks and incentives for renewable energy increase, and the prospect of finding more oil and gas becomes weaker, corporations are entering the green energy landscape to the tune of billions of dollars.

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