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Good Economic Signs At SABIC and DuPont

by Alexander H. Tullo
April 26, 2010 | A version of this story appeared in Volume 88, Issue 17

Signs are emerging that 2010 will be better than 2009 for the chemical industry. Saudi Basic Industries Corp. reports a first-quarter profit of $1.5 billion. This is in stark contrast to a year ago, at the height of the financial crisis, when SABIC posted a loss of $258 million for the quarter. At the time, the company blamed the economic downturn and a write-down of assets for the loss. Before the recession, SABIC’s profits peaked in the second quarter of 2008 at $2.0 billion. SABIC CEO Mohamed H. Al-Mady now reports strong improvement in volumes and prices for petrochemicals. “We are overcoming the impacts of the global financial crisis,” he says. Meanwhile, Standard & Poor’s has raised its investment-grade credit rating outlook for industry bellwether DuPont from “negative,” which means the rating is in danger of declining, to “stable.” Ratings analyst Cynthia Werneth expects that economic recovery, cost reductions, and growth in agriculture will offset an expected $700 million decline in DuPont’s pharmaceutical licensing income. The firm sold its drug business to Bristol-Myers Squibb in 2001 but retained rights to the hypertension drugs Cozaar and Hyzaar, which it licensed to Merck & Co. Patents for these drugs expire this year.


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