Pandemic hits first-quarter chemical earnings

The first quarter of earnings to be impacted by the novel coronavirus is on the books. A few US companies—petrochemical makers and others tied to heavy manufacturing—are already stinging from the slowing economy. Earnings at other firms, especially in agriculture, are holding up.

Executives uniformly say the worst is yet to come, however, possibly in the current quarter.

“We did begin to feel the early impact of COVID-19 in some areas of the business,” Chemours CEO Mark Vergnano says in a statement. But the company managed to improve first-quarter earnings by about 10% from the year-earlier period, despite a sales decline due to weakness in fluorochemical demand.

Chemours’s former parent, DuPont, felt the impact as well. The company increased production of Tyvek protective garments by 55% and is now making more than it ever has, but the pandemic hit businesses like materials for the automotive sector. DuPont posted a 10% decline in overall earnings for the first quarter.

Though Air Products says it is seeing strong demand for medical oxygen, the company had only a slight increase in sales and earnings for the quarter.

W. R. Grace posted a first-quarter sales decline of over 10% and an earnings drop of almost 25%. It saw a drop in demand for its refinery and chemical catalysts; it expects conditions to worsen and forecasts a 20–25% decline in sales for the second quarter.

Despite strength in engineering polymers and acetyl chemicals, Celanese saw a 13% decline in first-quarter earnings, and it’s bracing for more pain. “We expect that reduced consumer activity, which started in the latter half of the first quarter, particularly in the Western Hemisphere, will work its way through relevant value chains to impact our second quarter demand more meaningfully,” CEO Lori Ryerkerk says in a statement.

Huntsman had a 24% earnings decline as sales in its polyurethanes, materials, and textile effects businesses fell. But CEO Peter Huntsman said the company, which recently sold its ethylene oxide business to Indorama, has a relatively strong balance sheet. “Fortunately, we have been well prepared for this global economic crisis,” Huntsman says in his company’s earning announcement.

FMC, which posted increases of more than 4% in both sales and earnings, has hardly been affected by COVID-19 other than working “diligently” to supply crop protection chemicals to customers. The company expects 3% growth this year but says that out of caution it is suspending share repurchases until the “pandemic is better understood.”

FMC rival Corteva Agriscience had a banner quarter. The company enjoyed a jump in sales of over 16%, while earnings nearly doubled. Corteva attributed the gains to good weather and a large planting area in North America. In Europe, the company credited “robust early demand due to perceived supply concerns from COVID-19.”