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Chemical companies start 2022 strong

Sales jump in the first quarter, but firms struggle with higher costs

by Alexander H. Tullo
April 21, 2022 | A version of this story appeared in Volume 100, Issue 14


First-quarter financial results are starting to come in from chemical makers, with Dow announcing its earnings and a few major German firms releasing preliminary figures. The companies are posting large increases in sales from a year earlier, but all have been laboring to maintain profitability in the wake of escalating energy and feedstock costs.

By the numbers


Dow’s increase in sales in the first quarter


BASF’s increase in sales in the first quarter.

Dow posted a 28% sales increase in the quarter versus the quarter a year earlier. Selling prices also increased 28%, while volumes climbed a more modest 3%. Net income, excluding unusual items, rose 70%.

But profits at Dow’s largest business, packaging and specialty plastics, remained flat versus the year-earlier quarter, and the business’s before-tax profit margin fell from 20% to 16% as a consequence of rising energy costs. Profitability expanded in Dow’s intermediates and coating materials segments because of strong demand and higher selling prices.

“We capitalized on end-market demand strength across the breadth of our diverse portfolio and mitigated the impacts of rising raw material and energy costs,” Dow CEO Jim Fitterling said during an April 21 conference call with analysts.

Fitterling said Dow’s operations in Europe are running well and still eking out profits despite higher energy costs resulting from Russia’s invasion of Ukraine. “What’s happened with Russia entering Ukraine and what that’s caused has created more concerns on Europe’s ability to decouple from Russia and compete long term,” he said. The need for energy independence from Russia is a major reason the company decided recently to host a liquefied natural gas import terminal at its Stade, Germany, complex, he added.

BASF reported a 19% increase in first-quarter sales but a 29% decline in net income due to a write-off of loans its affiliate Wintershall Dea made to Nord Stream 2, the shelved natural gas pipeline from Russia to Germany.

Evonik Industries’ earnings before taxes rose 25%, and its sales increased 34%. “Across all divisions, we were able to adjust selling prices successfully and therefore offset the increase in variable costs,” Chairman Christian Kullmann said in the firm’s report of preliminary figures.

Crediting strong demand, Lanxess said sales rose 44% in the quarter, while earnings before taxes and unusual items increased 32%.



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