IHS Chemical Week


Specialty Chemicals News Roundup: July 18-July 26

3:21 PM MDT | July 26, 2011 | By REBECCA COONS

Specialty chemical earnings reports were mixed this week, although higher raw material costs were a recurring theme. Success in passing along those costs was another common thread, at least among firms posting strong results.

W.R. Grace reported net income of $76 million ($1.11/share), 49% higher than the same year-ago period and well above analysts’ estimates of 89 cts/share, as reported by Thomson Reuters (New York).  The company has had to implement rare earth surcharges on its refinery catalysts to offset significantly higher prices. Celanese also outpaced street expectations, posting earnings 34% higher, to $203 million ($1.66/share). Analysts’ estimates were for $1.43/share. Sales increased 16%, to $1.8 billion, primarily driven by higher pricing to offset higher raw material costs and favorable currency translations.

3M’s income increased 9%, to $1.2 billion, on record sales of $7.7 billion. Selling price increases only partially offset raw material inflation, the company says. Solutia reported net income of $68, 66% higher than the same period last year. Sales increased 8%, to $543 million, on improved selling prices and the addition of a solar cell encapsulant producer it acquired last year. Both 3M and Solutia reported earnings in line with analysts’ estimates. Colors and fragrances demand lifted Sensient Technologies’ net income to $33.5 million, 17% above last year’s results and 6% ahead of analyst estimates.

Higher raw material costs dampened some of last week's results, however. Excluding special items and a loss from discontinued operations, Cytec Industries' earnings from continuing operations were $45.9 million, down from $53.6 million in the year-ago quarter, as industrial markets slowed late in the quarter. The company raised coatings resins prices to offset higher raw material costs, but lost volume in the process. AkzoNobel’s net income fell 2%, to €273 million, despite a 5% bump in sales. The company cites a 20% increase in raw material costs, challenging business conditions, and one-off factors including several prolonged, large site maintenance stoppages. Volatile demand patterns drove AkzoNobel’s specialty chemicals earnings down 14%, to €220 million. CEO Hans Wijers admitted he is not satisfied with the company’s performance in the second quarter, but added that it takes time for price increases to work through.

Beyond earnings, solar power continues to be a hot area for investment. DuPont announced this week that it has acquired Innovalight, a Sunnyvale, CA-based producer of silicon inks and process technologies that increase the efficiency of crystalline silicon solar cells. Financial terms were not disclosed.  DuPont says the deal broadens its offerings to the photovoltaic (PV) market, adding complementary technologies that will help it more quickly address market demand for higher-efficiency solar cell designs. Solutia announced it will build its next polyvinyl butyral resin (PVB) plant in Malaysia. PVB is used in PV and laminated glass applications.

Solvay invested $14.4 million in Plextronics (Pittsburgh, PA), a printed electronics technology firm developing organic PV cells and organic light-emitting diodes (OLEDs). Plextronics boasts industry partners such as Sigma-Aldrich, and the Pennsylvania NanoMaterials Commercialization Center (Pittsburgh, PA).
Other investments include Dow Chemical’s plans to build a water treatment membrane materials plant in water-challenged Saudi Arabia, and BASF's announcement that it will double capacity for its phthalate-free plasticizer Hexamoll Dinch by 2013. Cabot says it will boost fumed silica capacity by more than 25% at its Barry, Wales facility, where it has a fence-line relationship with a Dow Corning silicone monomer plant.

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