Pricing and outages shape commodity earnings

20:26 PM | August 18, 2014 | —Clay Boswell

Commodity producers in North America have turned in mixed second-quarter results that show the effects of production outages and price pressures.

Huntsman reports net income of $119 million, up 153% year-on-year (YOY) on gains across all segments except pigments. Revenues totaled $2.99 billion, up 5.6% YOY. Earnings of 59 cts/share were well above the analysts’ consensus estimate of 48 cts/share compiled by Thomson Reuters (New York). “We saw strong earnings in the second quarter as a result of increased demand for key products such as [methylene di-para-phenylene isocyanate] and amines and higher selling prices for many of our products,” says Peter Huntsman, president and CEO.

Eastman Chemical reports net earnings of $292 million, up 9.8% YOY. Adjusted earnings per share of $1.92 beat the analysts’ consensus estimate of $1.84. Sales were flat, at $2.5 billion. Operating earnings slipped 3% YOY primarily because of lower specialty fluids and intermediates segment earnings and an unplanned shutdown at the Kingsport, TN.

Nova Chemicals reports profit of $167 million, down 17% YOY from $201 million, with higher margins in polyethylene (PE) partially offsetting lower margins in the olefins segments. Sales slipped 5.8%, to $1.29 billion. Operating profit for the olefins and polyolefins business unit totaled $275 million, down 3.6% YOY.

Westlake reports net income of $169.4 million, up 35% YOY. Earnings of $1.26/share fell short of the analysts’ consensus estimate of $1.45. Sales increased 7.0% YOY, to $998.6 million, on higher prices for major olefins products and higher volumes for PE, styrene, and caustic soda. However, planned maintenance at the Calvert City, KY, complex and converting the ethylene plant to ethane feedstock extended into the second quarter, lowering sales volumes for polyvinyl chloride and ethylene coproducts. Income from operations increased 13% YOY, to a record $266.8 million, Westlake says.

Axiall says weakness in chlor-alkali and an unplanned outage in vinyl chloride monomer pushed net income down 62% YOY, to $27.2 million. Sales fell 3.0% YOY, to $1.24 billion. Adjusted earnings of 48 cts/share were short of analysts’ consensus estimate of 50 cts/share. “In our building products segment, we experienced a normal seasonal increase in sales volumes but continued to see weaker Canadian sales and the impact of a weaker Canadian dollar during the period,” says president and CEO Paul Carrico.

Tronox reports an adjusted net loss of under $100,000 compared with a loss of $15 million in the year-ago period. Earnings of 0 cts/share were above analyst estimates of a loss of 31 cts/share. Revenue fell 7% YOY, to $490 million. “Despite essentially flat selling prices in the first half, our second-quarter performance was particularly strong as sales volumes increased across multiple products and geographic regions,” says chairman and CEO of Tronox Tom Casey.

A tough quarter
(in millions of dollars)
Company Sales % Change* Net income % Change*
Huntsman $2,998 6% $119 153%
Eastman 2,460 0 292 10
Nova 1,290 -6 167 -17
Axiall 1,237 -3 27 -62
Westlake 999 7 169 35
Tronox 490 -7 0 0
Kronos 444 -8 33 NM
Koppers 357 -4 1.6 -89
OCI Resources 113 2 21 27
*Change from year-ago quarter. NM=Not meaningful. Source: Company reports.