Issue Date: August 2, 2010
Chemical Earnings Bounce Back
As second-quarter financial reports begin to roll in, chemical industry CEOs are talking like it’s early 2008 again. DuPont’s Ellen J. Kullman kicked off an analyst conference call with this upbeat snapshot: “I’m pleased with our outstanding second-quarter result, with each reporting segment and all regions turning in double-digit top-line growth.”
Moreover, DuPont’s earnings of $1.1 billion were up 92.1% compared with the second quarter of 2009 and were equal to the prerecession second quarter of 2008. Sales and earnings for the firm’s electronics segment even surpassed their previous high-water mark, hit in 2008, Kullman pointed out.
DuPont’s earnings per share of $1.26 beat analyst consensus expectations by 24 cents. Deutsche Bank chemicals analyst David Begleiter stated in a report to clients that the strong second-quarter profits were driven by a 21% boost in sales volumes. In contrast, earnings growth in the first quarter was due in large part to price increases.
Industrial gas firms Air Products & Chemicals and Praxair benefited from the return of demand for electronics raw materials. Praxair’s earnings of $371 million improved 24.1% compared with last year’s, thanks also to particularly strong growth in South America and Asia.
For companies serving farmers, the second quarter brought sunny days. DuPont’s sales of seeds and its new Rynaxypyr insecticide helped bring 16% sales growth to its agriculture business. Fertilizer maker Mosaic saw earnings shoot up by 166.4% and its profit margin more than double on increased prices.
At specialty chemical firm Albemarle, earnings beat last year’s second quarter by 113.2%. The company reported strong volumes for brominated flame retardants and said sales were up significantly in all three of its businesses: polymers, catalysts, and fine chemicals.
At paint and chemicals maker PPG Industries, demand continues to lag behind prerecession levels by more than 10%, disclosed PPG CEO Charles E. Bunch. Still, in a report to investors, he wrote that the picture is improving. “Positive momentum in global industrial demand” and “strong demand across the Asia/Pacific and Latin American regions” more than offset weak construction markets in North America and Europe, Bunch said.
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