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Europe’s chemical makers look back fondly on 2017

Most companies are reporting strong growth in sales and earnings

by Alexander H. Tullo
February 19, 2018 | A version of this story appeared in Volume 96, Issue 8

A good year

European chemical firms mostly saw business conditions improve in 2017.

 a Results are preliminary.

Source: Companies
A table of European chemical earnings results.

European chemical firms mostly saw business conditions improve in 2017.

 a Results are preliminary.

Source: Companies

Full-year financial results are trickling in from European chemical makers. For the most part, companies are reporting that 2017 was a positive year that brought sales growth and surging profits.

DSM and Clariant both reported strong results last week. DSM’s 2017 sales increased 9% versus the year before, hitting $9.8 billion. Its earnings rose 36%.

“We are delighted to report again an excellent year,” said DSM CEO Feike Sijbesma. He pointed to success in the firm’s nutrition and materials businesses, both of which exceeded growth of the broader market. He also credited DSM’s ongoing cost-reduction and efficiency programs.

Clariant, which last year failed in its attempt to merge with Huntsman Corp., enjoyed a sales increase of 9% during the year to $6.5 billion. Its earnings rose by 15% to about $300 million.

Clariant saw growth across its businesses. For example, an increase in demand from synthesis gas-based chemical makers boosted its catalyst business, and the recovering oil sector lifted its oil and mining services unit.

The performance of these firms is in line with what BASF revealed last month. In a preliminary report, Europe’s largest chemical maker said its sales increased 12% to $72.9 billion, while its earnings vaulted by nearly 50% to $6.9 billion.

In preliminary results, Wacker Chemie likewise showed a jump in profits—by 40%—on a 6% increase in sales. The company says the gains came from both its chemical and its polysilicon businesses.

Results weren’t uniformly terrific across the board. Kemira reported a 5% increase in sales but said its profits slipped by 13%. In a conference call with analysts, CEO Jari Rosendal pointed out that the water treatment chemical company faced headwinds during the year from hurricanes, snowstorms, raw material shortages, and a weakening U.S. dollar.

The Norwegian fertilizer maker Yara saw a slight dip in its sales and a sizable 37% drop in its bottom line. While prices increased modestly, raw material costs spiked by 22%, the firm said. Borealis fingered poor performance in its fertilizer business for its own slight slip in profits.



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