Chemical earnings charge ahead

Based on early financial reports for 2021, the chemical industry has recovered from the COVID-19-induced economic shutdowns of 2020, but it is still grappling with lingering effects of the pandemic, such as inflation and a congested supply chain.

Celanese’s 2021 results broke records, with its sales rising 51%, to $8.5 billion. The company faced $1.1 billion in inflated raw material, energy, and logistics costs over 2020, but it managed to keep ahead of rising expenses by increasing its own prices 39%.

Like Celanese, Eastman Chemical posted record sales and earnings while contending with higher costs. “We did a great job getting all of our prices back up in specialty plastics,” CEO Mark J. Costa told analysts on a conference call. This effort, he said, helped “recover the distribution, energy, and raw material headwind that we had incurred.”

Sales at petrochemical maker LyondellBasell Industries rose 66% from 2020, while earnings jumped 224%. But by year-end, the company faced challenges in the form of an unprecedented surge in natural gas costs in Europe and slipping US ethylene and polyethylene prices.

On a conference call, LyondellBasell interim CEO Ken Lane told analysts that the downward pressure seems to be abating. “With economists expecting 2022 global GDP growth rates to exceed historical averages at roughly 4%, we remain constructive on the outlook for our businesses,” he said. “New capacity will come on line in 2022 but will largely be needed to meet growing demand from well-funded consumers.”

Dow showed a pattern similar to LyondellBasell’s when it announced results at the end of January: sales and earnings improved strongly for the year, but sales in its plastics business slipped in the fourth quarter.

Chemical companies are considering mergers and acquisitions as their fortunes improve. Celanese just completed the purchase of ExxonMobil’s Santoprene elastomer unit and is already contemplating more acquisitions in its engineered materials and acetyl chemistry businesses, CEO Lori Ryerkerk told analysts. “I would say our lens is still fairly wide open in terms of the types of M&A that we would consider and in terms of size, all the way from bolt-on to transformational,” she said.

DuPont put its engineering polymer business, which has annual sales of about $4.2 billion, on the block in November. CEO Ed Breen told analysts on a conference call that the unit has already attracted serious interest from multiple suitors. “Our target is to have a signed agreement by the end of the first quarter, with closing in the fourth quarter of this year,” he said.

LyondellBasell bought a 50% stake in Sasol’s new ethylene cracker and polyethylene plants in December 2020 and would like to purchase the rest of the Lake Charles, Louisiana, operation. “It’s our design and intent to own the other half of that joint venture,” Lane said on the call.