Chemical companies stumbled in 2022

Earnings reports for 2022 are coming out from major US chemical makers, and so far they paint a picture of an industry that faced many obstacles, particularly in the second half of the year.

It was a “very challenging year characterized by a war in Ukraine, evolving responses to the COVID pandemic, energy volatility, inflation, and rapidly changing monetary policies,” LyondellBasell Industries CEO Peter Vanacker told analysts on a conference call.

The company posted a sales increase of 9.3% but a profit decline of 32.7% for 2022.

Its olefins and polyolefins business saw slumping demand, particularly in Europe, where the unit’s plant operating rates were 60% in the fourth quarter and it lost $152 million before taxes. Europe has been mired in an energy crisis stemming from the war in Ukraine and the resulting disruption to natural gas supplies.

LyondellBasell officials told analysts that energy costs have moderated since the beginning of 2023. They expect the firm’s European plant operating rates to climb back to a healthier 80% this quarter.

Last month, Dow posted a decline in earnings that was similar to LyondellBasell’s. Dow also announced that it was laying off 2,000 workers as part of an effort to cut costs by $1 billion.

Eastman Chemical plans to eliminate $200 million in costs in 2023. Most cuts will come from manufacturing changes, such as lower spending on maintenance turnarounds. The company says it is also planning a workforce reduction.

In its earnings announcement, Eastman said its spending on raw materials, energy, and distribution jumped about $1.3 billion last year. Its earnings fell 18.9%.

DuPont stands out as a relatively strong performer, posting modest increases in both sales and earnings for the year.

The firm’s water treatment–related businesses were robust throughout 2022, as was its automotive adhesives unit, which posted a 20% gain in volumes for the fourth quarter. But DuPont saw sluggish demand for materials used in smartphones and personal computers.

DuPont CEO Ed Breen told analysts that smartphone sales in China, hit hard by COVID-19 lockdowns, declined by 20% in 2022. “None of the consumers were shopping,” he said.