ADVERTISEMENT
2 /3 FREE ARTICLES LEFT THIS MONTH Remaining
Chemistry matters. Join us to get the news you need.

If you have an ACS member number, please enter it here so we can link this account to your membership. (optional)

ACS values your privacy. By submitting your information, you are gaining access to C&EN and subscribing to our weekly newsletter. We use the information you provide to make your reading experience better, and we will never sell your data to third party members.

ENJOY UNLIMITED ACCES TO C&EN

Finance

Chemical companies enjoy third-quarter earnings bounce

Results were much better than those in the second quarter but don’t represent a full recovery

by Alexander H. Tullo
October 29, 2020 | APPEARED IN VOLUME 98, ISSUE 42

 

With many of the world’s largest chemical makers reporting their third-quarter results, a consensus is emerging: results are rebounding from the second-quarter lows driven by the COVID-19 lockdown but have yet to fully recover.

The second quarter—when precautions to combat the pandemic shut down sectors such as the auto industry and kept consumers stuck at home—was one of the worst for the chemical industry in recent memory. Nearly every major chemical company saw sharp declines in sales and earnings, and several posted losses.


Third-quarter chemical results
Chemical makers posted a strong improvement over second-quarter lows.

Source: C&EN tabulations based on company documents.
Note: n.m.means the comparison is not meaningful because of a prior-quarter loss.
09842-buscon5-table.jpg

The third quarter appears to have been much better. Dow, the largest US chemical producer, reported sales of $9.7 billion—a 9.8% decline compared with the year-earlier period but a 16.3% increase versus the previous 3 months. Likewise, Dow reported third-quarter profits of $376 million, a vast improvement over the $189 million loss it posted in the second quarter.

“As the global economy began a gradual recovery, we captured demand growth from second-quarter lows across all segments,” Dow CEO James R. Fitterling told analysts in a conference call Oct. 22.

Bright spots for the company included polyurethane chemicals, which enjoyed a sharp uptick due to resuscitated automotive and construction markets. Sales of plastics for packaging were up 14% from the previous quarter.

Howard Ungerleider, Dow’s president and chief financial officer (CFO), told analysts that he expects sustained momentum. “The strength we saw in the third quarter in key value chains like polyethylene and isocyanates is expected to continue as durable goods end-market demand further rebounds and packaging demand continues to be resilient,” he said.

Celanese saw sales jump by 18.3% and earnings climb 50% versus the second quarter. Volumes of the company’s engineering polymers rose by 27%. In prepared remarks to analysts, CEO Lori Ryerkerk said sales to carmakers increased 81% as that industry restarted assembly lines. Another strong business for the company was acetyl chemicals, which had an 18% rise in volumes.

Ryerkerk warned that the economy is fragile, however. “As recovery continues, we do not yet have certainty of when next year demand will surpass pre-COVID levels, given the unpredictability of potential setbacks,” she told analysts.

BASF CEO Martin Brudermüller made a similar point in his remarks to analysts. “The bottom seems to have been reached, and a gradual recovery is occurring,” he said. Orders are returning to normal levels, he added, yet “the recent worsening of the infection situation worldwide is jeopardizing this development.”

As recovery continues, we do not yet have certainty of when next year demand will surpass pre-COVID levels, given the unpredictability of potential setbacks.
Lori Ryerkerk, CEO, Celanese

Covestro bucked the trend by reporting a 21.8% increase in earnings from the third quarter of 2019, to $210 million. CFO Thomas Toepfer said the “outperformance was largely driven by cost-savings measures.”

DuPont used the results occasion to announce the sale of its biomaterials unit, which consists mainly of the Sorona polytrimethylene terephthalate fibers business. DuPont makes the polymer from 1,3-propanediol produced via fermentation in a joint venture with Tate & Lyle.

The $240 million sale—the buyer is so far unnamed—was signed earlier this month. The business had sales of $211 million in 2019. DuPont has been looking to exit biomaterials for more than a year.DuPont’s electronics and imaging business posted a record quarter, with sales up 7% versus the same period in 2019. Materials for semiconductors led the gains as the industry rolled out new technology. Organic light-emitting diode display materials have also been strong.

Huntsman also unveiled a divestiture at earnings time. It is selling its consumer adhesives business in India to Pidilite Industries for $285 million. In addition, Huntsman is raising about $250 million in cash through the sale of shares in its former Venator pigments business to the private equity firm SK Capital.

X

Article:

This article has been sent to the following recipient:

Leave A Comment

*Required to comment