Top 50 Chemical Producers

C &EN'S 2007 SURVEY of the Top 50 U.S. chemical producers reveals an industry in relative quiet. Some mergers and acquisitions transpired but not enough to turn the industry on its ear. Sales and profits improved for most companies but not nearly as much as they did in the previous two years.

The combined sales of the 50 companies surveyed, based on data compiled from their 2006 financial results, increased by 6.3% over 2005, hitting $299.3 billion. This growth is solid, but it lags behind the 10.9% sales increase reported in last year's survey and the whopping 23.0% jump shown in C&EN's 2005 ranking.

Forty-four of the companies surveyed publicly disclose their operating profits. As a group, profits at these firms increased 3.8% over the prior year, hitting $29.6 billion. Again, this growth is slower than those in the previous two surveys. C&EN's 2006 ranking showed a 37.7% profit increase, and the 2005 report found a 66.4% increase.

This year, all but seven of the 50 companies surveyed reported a sales increase. Seventeen of the profit-reporting firms posted a decrease in profits compared with the year-ago period. Only one, polyethylene terephthalate maker Wellman, reported a loss. No company in last year's survey had a loss.

The largest U.S. chemical company is Dow Chemical. Its revenues grew by 6.1% in 2006 to reach an all-time record of $49.1 billion. It also reaped the most profits, $4.8 billion.

Petrochemical giant ExxonMobil Chemical also has been breaking records. The company had $34.1 billion in 2006 sales, making it number two on the list for the second year in a row. Its after-tax profits were $4.4 billion.

At a meeting with financial analysts earlier this year, ExxonMobil Executive Vice President J. Stephen Simon was hardly bashful about the chemical unit's strong showing, pointing out that his firm's profit numbers were better than those of other large oil companies with petrochemical businesses such as BP, Royal Dutch/Shell, and Total. Simon attributed the success to a portfolio of businesses that are among the market share leaders in their fields. He also cited, as the company often does, the strong ties between ExxonMobil's chemical and oil-refining operations. "Capture of integration synergies is another key differentiating factor versus the competition," he said.

DuPont, which had been the largest U.S. chemical company until Dow's purchase of Union Carbide rocketed Dow into first in the 2002 ranking, finishes third again in this year's survey. Its sales grew by 2.8%, to $28.9 billion.

Lyondell Chemical finishes fourth once again with $19.5 billion in chemical sales. Its purchase of Millennium Chemical propelled the company from 13th place in C&EN's 2005 survey to fourth place last year. Lyondell was on the acquisition path again in 2006, buying out its partner, the Venezuelan state oil company PDVSA, in their refining joint venture. But that business makes fuels, not chemicals, and had no influence on the firm's ranking.

Chevron Phillips rose from sixth place to fifth, with chemical sales up 10.6% to $11.8 billion. Its rise relegates Huntsman Corp. to sixth place.

Huntsman's sales fell by 18%, to $10.6 billion. The company sold pieces of its commodity chemicals business to Saudi Basic Industries and Texas Petrochemicals; the sale of most of its North American commodity chemicals business to Koch Industries is still pending. For next year's ranking, Huntsman will get a lift from a full year of sales from the textile chemicals business it acquired from Ciba Specialty Chemicals in 2006.

This year's survey finds little movement among the rest of the Top 10. Praxair and Air Products & Chemicals switched positions, and this time around, Eastman Chemical rose past Rohm and Haas to take the 10th spot.

For the Top 50, this year's ranking does have three new additions. The largest is Momentive Performance Materials, the new name for the General Electric quartz and silicones business that was sold to private equity firm Apollo Management last December (C&EN, May 7, page 36). It debuts on the list at number 29 with $2.4 billion in 2006 sales.

After a two-year absence, Ferro returns to the list at number 34. Accounting irregularities that caused delays in financial reporting kept the company out of two Top 50 surveys. Had it released its 2005 sales figures in time for last year's survey, it would have come in at number 37.

International Paper, which sometimes makes it on the list near the bottom, is number 50 this year. This year also marks the company's Top 50 swan song, because it sold its chemical unit, Arizona Chemical, to private equity firm Rhone Capital in February.

THREE COMPANIES that were on the 2006 list didn't make the ranking this year. Arsenal Capital didn't disclose sales figures for the two specialty chemical firms it owns, Velsicol Chemical and Vertellus Specialties. Phelps Dodge is off this year because it sold its Columbian Chemicals carbon black business to a joint venture owned by One Equity Partners and South Korea's DC Chemical in March 2006.

The most noteworthy company departing the ranking is catalyst maker Engelhard, which was 29th in the last year's survey with $2.4 billion in sales. BASF acquired the Iselin, N.J.-based company last June. Also last year, BASF purchased Johnson Polymer and Degussa's construction chemicals unit.

BASF again leads the ranking of the Top 25 foreign-owned companies in 2007, based on sales administered by the firms' U.S. headquarters. Its nearly 20% increase in sales to $14.3 billon, largely because of its acquisitions, widened its lead over its closest rival, Shell Oil.

At a press conference in New Jersey last fall, Klaus Löbbe, the BASF board member responsible for North America, pointed out that his company is the third largest behind Dow and ExxonMobil if only North American sales are considered. "We have a long history in North America, but in the past decade, we have taken steps that have amounted to a quantum leap in BASF's presence and impact," Löbbe said.

The ranking of foreign-owned companies reveals many substantial year-over-year changes. Canadian fertilizer maker Agrium, which purchased U.S. agricultural retailer Royster-Clark last year, jumps from number 16 to number seven. The company's U.S. sales, however, now include a significant amount of nonchemical sales.

Basell, the former polyolefins joint venture between BASF and Shell, joins the list this year at number 13 with $2.2 billion in sales. The company, owned since August 2005 by the private equity firm Access Industries, didn't have a full year of sales at the time of the 2006 survey.

Linde debuts in the ranking after its purchase of British industrial gases firm BOC, placing 18th with $1.7 billion in sales. Helsinki-based Kemira also appears on the list for the first time with 2006 sales of $833.6 million, a 38.5% increase over its sales in 2005, following the purchase of Cytec Industries' water treatment unit.

It's hard to predict what next year may bring for the Top 50 survey. General Electric is planning to sell its plastics business, so that business could appear under a different name or disappear altogether. Nothing else has emerged this year that would significantly affect the ranking, but the year is still young.