Specialty earnings rise along with end markets

22:01 PM | February 10, 2014 | —CW Staff

Specialty chemical companies mostly report solid fourth-quarter results, since key end markets have grown steadily. Sherwin-Williams (SW) rode the rebound in architectural paint sales to a strong quarter, while Ashland beat estimates thanks to strong results in adhesives. FMC posted gains in agricultural chemicals.

SW reports fourth-quarter net earnings of $116.1 million, or $1.14/share, up 70.5% year-on-year (YOY), on sales up 10.8%, to $2.46 billion. The increases were mostly due to higher volumes in paint stores and acquisitions, with the latter increasing sales by 4.6% during the quarter.

“Over the past year, our paint stores group had positive sales volume across all end market segments and drove strong operating results. Our consumer group improved its operating margins through better-than-expected second-half sales and improved operating efficiencies. The global finishes group continued improving segment profit as a percent to sales through improved operating efficiencies and good cost control,” says Christopher Connor, SW chairman and CEO. SW expects first-quarter earnings to total 95 cts–$1.15/share, roughly comparalbe to the year-ago period.

Ashland posted net income from continuing operations of $111 million for the quarter ended 31 December 2013, up 9% YOY, on higher volumes in each of its units. Earnings per share of $1.40/share beat analyst estimates of $1.31/share, according to Thomson Reuters (New York). Sales were flat, at $1.9 billion. "While overall sales were flat due to lower pricing in some of our more commoditized businesses, each of our four commercial units reported volume gains over the prior year," says James O'Brien, Ashland chairman and CEO. The quarter is Ashland’s seasonally weakest period, he adds.

Ashland outlined its plan to restructure the company following the planned sale of water technologies. The company will operate within three units—specialty ingredients, performance materials and Valvoline—after the sale. Ashland will cut about 800–1,000 jobs; relocate an additional 800–1,000 jobs; and save about $150–200 million/year in costs.

FMC reports adjusted earnings that total $1.05/share, up 36% YOY and ahead of analysts’ consensus estimate of 94 cts/share. Actual fourth-quarter earnings of $27.1 million, or 20 cts/share, were hit by $114.3 million in charges related to the sale of the company’s Peroxygens business.

FMC expects segment earnings for agricultural solutions and health and nutrition to rise in the midteens YOY during 2014, while minerals segment earnings are expected to rise in the high teens. The company expects full-year 2014 earnings to total $4.35–4.55/share, up about 15% from 2013 levels.

Fourth quarter rising
(sales and net income in millions of dollars)
Company Sales % change* Net income % change
Sherwin-Williams $2,460 11% $116 71%
Ashland 1,900 0 111 9
FMC1 1,100 24 141 36
PolyOne 924 42 25 700
W.R. Grace 777 -3 30 NA
Albemarle1 692 1 88 -16
Cytec1 464 2 49 6
1) Figures for FMC, Albemarle, and Cytec reflect adjusted net income. Source: Company reports. *percent change from year-ago quarter