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February 2010
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Company News

Still not out of the woods
The 2009 financial results announced by chemical majors, like Dow Chemical, Clariant, Wacker, DuPont, Sabic, DSM and PolyOne, amidst cautious optimism for 2010 reveal improvements in the final quarter, with most reporting better growth in emerging markets like China and a modest growth in Europe and the US.

Dow Chemical officials definitely had something to smile about. Even though sales for the whole year in 2009 were 22% lower than in 2008 and its volumes dropped by 13%, its fourth quarter sales increased by 8% over the previous month and by 4% compared to the previous year. Meanwhile in its basic plastics and performance products businesses, sales for PE, PP, PS and PC as well as PU were down by 30% but went up by 17% compared to the fourth quarter in 2008. But the company relied heavily on developing countries and volumes in China, for example, went up by nearly 60%, and in India and Russia by 30%.

Again, Asia figured prominently in another US company’s business. DuPont’s Performance Materials unit said it had strong volume recovery in all regions, particularly in the Asia Pacific region. In the fourth quarter, the unit, which includes nylon, speciality elastomer and other engineering resins, had a higher profit, thus doubling its profit for the year, compared to 2008. The unit’s fourth quarter sales went up 20% but for the full year, sales dropped by 26%.

Another company that posted stronger fourth quarter profit is Sabic, thanks to higher prices and sales volumes across most of its product lines. As for 2010, the company says outlook is good since new production will come on stream from its projects in Sharq, Yansab and in China.

Speciality chemicals producer Clariant does not foresee a sustainable recovery of the global economy as a result of continuing structural problems, though it expects Asia, in particular China, and Latin America to be positive drivers for the world economy. As a consequence, Clariant expects sales growth this year to be in the low single-digit range. The operating income margin before exceptionals is expected to rise above 6%. Cash flow from operations will remain strong but below the levels of 2009. As part of the ongoing asset network optimisation programme, further measures are being implemented, affecting production sites in Switzerland, Brazil and India. The company is also cutting 500 jobs, 400 of them in Switzerland, as a result of its dismal financial performance during 2009, with a net loss of EUR132 million compared with a loss of EUR25 million in 2008.

Munich-based Wacker Chemie posted consolidated sales of EUR3.7 billion in 2009 14% down from the previous year. However, the company says it is on a sound course, since its 2009 investment ratio reached 20% and it expects to increase both its consolidated sales and net income again in fiscal 2010.

Another European company DSM says that after a difficult first half year, it had improved results in the second half of the year as its Materials Sciences businesses started to recover. And although its full year operating profit halved compared to its record performance of 2008, the decline in DSM's core activities was limited to 26%. But its exercise to reduce costs delivered over EUR150 million in savings during the year, whilst its focus on cash resulted in an unprecedented operating cash flow of almost EUR1.3 billion in 2009. As for this year, DSM will continue its strategic transformation into a Life Sciences and Materials Sciences company, having disposed of two businesses last year.

Other US companies like PolyOne reported a stronger fourth quarter with a profit of US$68 million, compared to a loss of almost US$273 million a year ago, even though sales declined by 25%. The higher profit was especially due to its Specialty Engineered Materials business segment that recorded 26% higher profit.

 

 
 
 
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