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Chemical Finance Digest, July 25-29
August 1, 2011 | By VINCENT VALK
Lots of big second-quarter earnings reports came in last week, and most were positive. Dow's income rose 63% year-on-year as the company beat estimates. DuPont also beat estimates, with income 5%, and raised its full-year outlook. LyondellBasell's income was up 27% on higher margins for ethylene and polypropylene. Eastman's net earnings were up 43% on higher selling prices and volumes. Praxair's net income rose 16% as the company raised its fully-year outlook.
Not all was rosy, however. BASF's income came in weaker than expected. While chemical profits at oil majors Shell and ConocoPhillips rose, ExxonMobil Chemical's profit fell. Dow Corning's income fell 14%, mostly due to rising raw material and energy prices.
It was a quiet week for M&A news, though AkzoNobel is planning to acquire a Chinese specialty surfactant maker, and the European Commission approved Ineos's acquisition of Tessenderlo's PVC business.
Air Products is issuing $300 million new senior debt, due in 2016. S&P has rated the debt 'A,' while Moody's rated it 'A2.' Proceeds from the issuance will be used to pay down short-term debt and for general corporate purposes.
In macroeconomic news, the U.S. GDP growth figure for the second-quarter was released, and it was a paltry 1.3%. Perhaps even worse, first-quarter growth was revised downwards to 0.4% from 1.9%. "There is little doubt that, since the summer of 2010, U.S. growth has faltered—the only question now is how much weaker could things get and how long will the (very) “soft patch” last. Prospects for a second-half pickup are fading fast," says IHS Global Insight chief economist Nigel Gault. "IHS Global Insight now expects that growth in the third quarter will come in much weaker than previously expected—probably less than 2% and possibly less than 1%." The previous second-half forecast was for 3% growth, Gault notes.
The week ahead will see the release June's U.S. employment numbers on Friday. The prognosis is not good – an increase of just 75,000, as the government continues to shed jobs.