IHS Chemical Week

CHEM IDEAS

Specialties Snapshot, October 13-20

12:33 PM MDT | October 21, 2011 | By REBECCA COONS

Early earnings reports among specialty chemicals firms did little to solidify the economic outlook. AzkoNobel abandoned its full-year earnings target and announced a major restructuring to improve profitability. Several firms posted gains on higher prices, but noted caution among customers and weakening demand as the quarter progressed. A. Schulman experienced an unexpected late-quarter demand surge, after lowering its guidance in August.

Perhaps the most cause for pessimism can be found in AkzoNobel's earnings report.  Net income for the third quarter plummeted 32% from the year-ago quarter, to €217 million ($298 million). The company says it is unlikely to hit its earnings 2011 earnings target and will implement an aggressive 3-year, $686 million/year restructuring effort. "We do not expect the macroeconomic situation to improve quickly," CEO Hans Wijers said. 

PPG Industries reported net income of $311 million ($1.96/share) for the quarter ended September 30, 19% higher than the year-ago quarter. Third-quarter sales volumes were flat year-on-year, but higher prices pushed profit higher, the company says.

Excluding special items, Chemtura's preliminary results indicate operating profits rose 21%, to $46 million, largely due to improved selling prices. Chairman and CEO Craig Rogerson noted caution from its industrial customers as the quarter progressed. Rockwood Holdings posted a 46% rise in net income, to $84 million, buoyed by higher selling prices. Volumes fell in performance additives and titanium dioxide pigments. Higher selling prices and a better sales mix managed to keep Stepan's third quarter results flat compared to last year, but weakness in consumer product volumes was noted.

Both Momentive Specialty Chemicals and Momentive Performance Materials reported preliminary third quarter earnings down from the same period last year, citing economic uncertainty among its customers and tightening credit in China. Plans are being reviewed to “aggressively accelerate savings” from shared services between Momentive Specialty Chemicals and Momentive Performance Chemicals.

A. Schulman lifted its full-year guidance because of unexpected strength in volume, improved margins, and favorable tax adjustments. Schulman lowered its guidance in August because it anticipated $5 million in pre-tax charges and weakening demand. However, both are expected to be largely offset by an increase in European distribution volumes late in the quarter, which Schulman believes was due to customers buying ahead of expected raw material price increases; margin expansion across all its businesses; and annual tax adjustments that contributed more favorably to net income than usual. Despite the tailwind, Schulman chairman, president, and CEO Joseph Gingo provided a cautious outlook for the coming year. "[T]he lack of stability in global markets is making forward-looking projections into 2012 very difficult. While this latest boost in margin will contribute to better results for the year, we are not convinced that this favorable trend is sustainable, given the current unpredictability of the global markets."















 
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