Chemical Finance Digest, Jan. 16-20
8:11 AM MST | January 24, 2012 | By VINCENT VALK
Topping the headlines last week, early fourth-quarter earnings showed steady growth despite some weakness in volumes. PPG’s net income rose 5%, to $216 million, on modest sales growth, while H.B. Fuller’s rose 20.5%, to $26.4 million. PPG beat estimates, while H.B. Fuller missed.
Meanwhile, Celanese cut its 2011 outlook on weak demand from Europe. The company will release its earnings on January 30.
In M&A news, Ecolab is cutting 500 jobs in a post-Nalco-merger restructuring. The company is aiming to reduce operating costs by $250 million/year by 2014. Westlake’s $1.1 billion offer for Georgia Gulf turned hostile, as Georgia Gulf’s shareholders rejected the bid as “inadequate and highly opportunistic.” In terms of announced deals, it was a quiet week, though Carbogen Amcis has acquired a French clinical trial materials firm.
Chemical company credit ratings look strong despite economic uncertainty, according to Standard & Poor’s. S&P upgraded 25 North American chemical companies in 2011 and downgraded just five.
No new debt issues were announced last week, though both Moody’s and S&P placed the ratings of Westlake and Georgia Gulf under review for a downgrade and an upgrade, respectively. Westlake has not disclosed how it would fund its $1.1 billion unsolicited bid for Georgia Gulf.
In macroeconomic news, U.S. housing starts fell 4.1% to a 657,000 annual rate, the second-highest monthly figure since April 2010. In a bit of particularly good news, U.S. industrial production rose 0.4% - with manufacturing alone (that is, excluding utilities) posting even stronger 0.9% gain. “December showed the best combination of lucky circumstances that can readily be imagined. Almost everything went right, as both the core and total manufacturing numbers show. The early-2012 manufacturing numbers are unlikely to repeat this fluke combination of good news, but the key thing to look for in early 2012 numbers will be how much, if any, the manufacturing sector relapses,” says IHS Global Insight economist Michael Montgomery.
The week ahead will see a number of big chemical industry earnings releases. Here’s a rundown of what to expect (analysts' consensus is in parenthesis):Monday: Albemarle ($1.09/share).
Tuesday: DuPont (33 cts/share); Ashland (99 cts/share); Air Products ($1.36/share).
Wednesday: Praxair ($1.37/share); Methanex (58 cts/share).
Thursday: Airgas (97 cts/share); Eastman Chemical (79 cts/share); PotashCorp (89 cts/share); 3M ($1.31/share); Sherwin Williams (83 cts/share).
Friday: Omnova (7 cts/share).