Chemical Earnings

BUSINESS

Early results from chemical companies indicate that the fourth quarter of 2004 continued the industry's streak of sales and earnings improvement. All eight chemical firms that have published their results have shown at least double-digit growth over the same period in 2003.

The largest percentage gain was at Monsanto, which, after taking out a number of unusual charges, managed to increase its earnings from continuing operations to $35.0 million, 236.5% above the fourth-quarter-2003 level. Sales at the company were up just 6.8% to $1.10 billion. CEO Hugh Grant says, "The value of our seeds and [biotech] traits business is growing globally." He adds that the company saw good early performance in the quarter not only in the U.S., but also in Brazil, Europe, and Australia.

Industry leader Dow Chemical had the largest dollar earnings growth among the companies--$348.0 million, or 73.3%, to $823.0 million. Sales were up 31.3% to $10.9 billion. CEO Andrew N. Liveris explains: "In part, the margin expansion was driven by the improvement we saw in industry fundamentals. But price/volume management and our ongoing commitment to controlling costs were equally important contributors."

Number two DuPont saw earnings increase 25.3% to $371.0 million. While sales at the company declined 7.4% to $6.0 billion, when the company's divested textile and interiors business is excluded from fourth-quarter 2003, total comparable segment sales were up 14%. The company notes that all of its segments showed growth in pretax income.

Another big gainer during the quarter was Cytec Industries, where earnings almost doubled, rising 91.8% to $28.0 million, and sales increased 24.5% to $450.6 million.