Chemical Finance Digest, Jan. 30-Feb. 3
3:57 PM MST | February 6, 2012 | By VINCENT VALK
Topping the headlines last week, Dow Chemical swung to a $20 million fourth-quarter loss on a tax charge. Excluding the charge, earnings totaled $289 million, or 25 cts/share. Earnings fell short of analysts’ estimates of 30 cts/share, and were also down from the year-ago period.
In other earnings news, Celanese adjusted earnings fell 21%, to 58 cts/share. Reported earnings were actually up 64%, to $95 million, on reduced losses from discontinued operations. Cytec’s earnings were down 15%, to $41.6 million, while Cabot’s fell 39% to $46 million. Japanese firms, including Mitsubishi Chemical, also posted profit declines.
In M&A news, Westlake raised its unsolicited bid for Georgia Gulf to $35/share, a 17% increase. The bid remains unimpressive to Georgia Gulf, who rejected it. Meanwhile, A. Schulman has purchased masterbatch maker Elian from British Vista for $63 million in cash.
In debt news, Praxair has issued $600 million in new bonds that will be used to pay down short-term debt. The bonds mature in 2022, and carry an interest rate of 2.45%, about 50 basis points higher than the ten-year treasury yield. Meanwhile, Tronox has increased the size of its term loan by $150 million, to $700 million, and Rockwood has agreed to a new, $350 million, five-year term loan that will be used to retire senior subordinated debt.
In macroeconomic news, Moody’s says that the chemical industry is set to grow in 2012, but that the European economy remains a risk. Outside the industry, a markedly positive U.S. jobs report on Friday provided further grist for economic optimists. The report showed 243,000 new jobs created in January, and a fall in the unemployment rate (to 8.3%) that actually resulted from job creation. While the job market still has a long way to go, the report was “a big positive surprise,” says IHS Global Insight economist Nigel Gault. “They suggest a virtuous circle may be forming, whereby employment and consumer spending move up together. In combination with better news from Europe, recession fears are easing still further, and growth prospects for 2012 are improving.”
The week ahead will see a few more fourth-quarter earnings reports (as always, Wall Street consensus, as reported by Thomson Reuters, in parenthesis):Tuesday: Compass Minerals ($1.62/share).
Wednesday: FMC ($1.37/share); Agrium ($2/share).
Thursday: IFF (71 cts/share).