Commodity, diversified makers report a solid second quarter

13:44 PM | August 4, 2014 | —CW Staff

Most commodity and diversified chemical makers have turned in solid results for the second quarter, the combined result of improving demand and productivity gains.

Dow Chemical reports adjusted earnings of 74 cts/share, up 16% year-on-year (YOY) and ahead of the 72 cts/share analyst consensus compiled by Thomson Reuters (New York). Second-quarter net income totaled $882 million, down 62% from the year-ago quarter, which was inflated by $2.2-billion in proceeds from the K-Dow arbitration resolution. Sales were up 2% YOY, to $14.9 billion, with gains in all operating segments led by performance plastics, at 4%, and electronic and functional materials sales, at 5%.

Dow reports adjusted sales gains in most geographic areas, with increases reported in both developed (up 3%) and emerging (up 2%) regions. Gains were led by Western Europe and the United States, up 6% and 5%, respectively.

“Our results reflect excellent progress against Dow’s near-term priorities and clearly illustrate our ongoing drive to execute self-help actions that are delivering growth on both the top and bottom lines,” says Andrew Liveris, Dow chairman and CEO.

DuPont reports net income of $1.1 billion, up 0.4% YOY. Consolidated net sales were $9.7 billion, down 1% YOY. Reported operating earnings were $1.17/share, in line with DuPont’s 26 June earnings warning and down 9% YOY.

Volume growth in crop protection, nutrition and health, and most industrial businesses was offset by the impact of portfolio changes; a planned maintenance shutdown at the company’s Orange, TX, ethylene plant; and lower corn seed volumes, DuPont says. Segment operating earnings fell 5% YOY, to $1.8 billion. Strong operating earnings growth in industrial biosciences, nutrition and health, and safety and protection was more than offset by declines in agriculture, electronics, performance chemicals, and performance materials. Overall revenues were down 3% in the United States and Canada and 4% in Latin America, DuPont says. Developed Europe sales were up 5%, while developing Asia gained 3%.

LyondellBasell Industries reports net income of $1.2 billion, up 27% YOY on strong gains distributed across the business. Net sales totaled $12.1 billion, up 9% YOY. Reported earnings from continuing operations were $2.22/share, up 39% YOY and well above the analysts’ consensus estimate of $1.92/share.

“Importantly, every segment contributed to this achievement,” says Jim Gallogly, LyondellBasell CEO. “Of particular note was the strength in our olefins and polyolefins, Americas segment, which generated nearly $1 billion of Ebitda even while we were performing significant scheduled maintenance at our La Porte, TX, ethylene site.”

Celanese reports net earnings of $258 million, up 94% YOY from $133 million on stronger pricing and volumes. Sales totaled $1.8 billion, up 7% YOY from $1.65 billion. Adjusted earnings of $1.47/share increased 31% YOY and handily exceeded the analysts’ consensus estimate of $1.24/share.

“Our excellent performance through the first six months of the year gives me confidence that we can generate adjusted earnings-per-share growth in the range of 15–17% in 2014,” says Mark Rohr, Celanese chairman and CEO.

Honeywell reports that quarterly profit in its performance materials and technologies (PMT) segment increased 8% YOY, to $475 million. Segment revenue rose 6% YOY, to $2.6 billion. Segment profit and margin were driven by productivity gains and higher volume partially offset by price and raw material headwinds in resins and chemicals. Higher revenues were driven by UOP catalyst and gas processing growth as well as higher sales in advanced materials—particularly fluorine products.

Olin reports second-quarter income of $36.6 million, down 16% YOY on weak results in the chlor-alkali segment. Sales totaled $570.4 million, down 12% YOY. However, earnings of 46 cts/share beat the analysts’ consensus estimate of 45 cts/share.

A mixed bag
(in millions of dollars)
Company Sales % Change* Net income % Change*
Dow $14,917 2% $882 -62%
LyondellBasell 12,117 9 1,176 27
DuPont 9,706 -1 1,074 0.4
Honeywell PMT** 2,636 6 475 8
Celanese 1,769 7 258 94
Olin 571 -12 37 -16
*Change from year-ago quarter. **Results for only Honeywell’s performance materials and technologies segment. Source: Company reports