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Cabot Corp reverses fiscal first quarter loss, grows sales
FINANCIALS
$20 million in 4Q 2018, $29 million lower than in the previous quarter. Compared with 3Q 2018, Compounding & Solutions results increased by approximately $15 million, with a full quarter’s contribution from the addition of the A. Schulman product lines partially offset by volume and margin declines in polypropylene compounds, the company reports. Advanced Polymers results decreased by around $15 million with declines in both margins and volume. Comparing the 4Q 2018 figures with those from 4Q 2017, EBITDA increased by $4 million. Compared with the 2017 quarter, Compounding & Solutions results increased by approximately $25 million. The addition of new product lines from the acquisition were again partially offset by volume and margin declines in polypropylene compounds. Advanced Polymers results were relatively unchanged, LyondellBasell says. For full-year 2018, the unit’s EBITDA amounted to $400 million, down from $438 million in 2017, and its annual operating income declined by almost 19% to $329 million. Transaction and integration costs related to the A. Schulman acquisition and assigned to the segment were $69 million during 2018. Compared with the previous year, Compounding & Solutions results increased by around $15 million in 2018. More information: www.lyondellbasell.com/advancedpolymersolutions
Cabot Corp reverses fiscal first quarter loss, grows sales
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or the first quarter of its 2019 fiscal year, Bostonbased Cabot Corp posted net sales of US$821 million, a 14% increase from net sales of $720 million a year earlier despite challenging conditions including softer automotive demand, customer inventory destocking and a weaker environment in China, which impacted results in the Performance Chemicals and Reinforcement Materials segments. Net income for the quarter ended 31 December 2018 was $69 million compared to a net loss of $122 million in 1Q fiscal 2018, which was impacted by a significant tax charge. The company reported ‘solid’ results for the Reinforcement Materials segment in 1Q fiscal 2019. Sales were $457 million, up 18% from segmental sales of $387 million in the same period a year earlier. EBIT was unchanged compared to the first quarter of fiscal 2018 at
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$62 million. Higher volumes and the benefit from improved pricing and product mix from 2018 tyre customer agreements were offset by the unfavourable effect of lower margins in China, Cabot reports. The margins in China were adversely impacted by lower pricing from weak automotive demand coupled with high inventory levels and the sharp decline of feedstock costs toward the end of the quarter. Globally, volumes in the Reinforcement Materials segment increased 1% year over year, primarily due to 3% gains in the Americas and Asia, partially offset by lower demand (-8%) in Europe, the Middle East & Africa (EMEA). The company’s Performance Chemicals segment achieved sales of $231 million in 1Q fiscal 2019, a small rise of about 1% versus sales of $229 million a year earlier. Sales of Performance Additives rose 5% to $167 million but Formulated Solutions sales fell about 8% to $64 million. In October 2018, Cabot realigned its business reporting structure under the Performance Chemicals segment and now combines the speciality carbons, fumed metal oxides and aerogel product lines into the Performance Additives business, and the speciality compounds and inkjet product lines into the Formulated Solutions business. The previous year’s Performance Chemicals segment revenues have been recast to reflect this realignment. The segment’s EBIT fell 23% to $36 million in 1Q fiscal 2019, compared to $47 million the previous year, due primarily to lower volumes and margins and higher costs related to growth investments, Cabot reports. Volumes decreased by 3% in the Performance Additives business and 2% in the Formulated Solutions business, impacted by the softer automotive demand in EMEA and China, and customer destocking resulting from declining polymer prices. Costs related to growth investments were primarily related to two new fumed silica plants that are scheduled to commence operations over the next 12 months, the company says. Commenting on Cabot’s outlook for fiscal 2019, CEO Sean Keohane says that the company remains confident in its ability to grow earnings despite the current business environment. ‘We expect customer destocking and the impact on automotive production from new emissions regulations in Europe to have less of an impact in the second quarter of fiscal year 2019 than in the first quarter’, he says. Reinforcement Materials is expected to benefit from the calendar year 2019 customer agreements, but will face headwinds in the second quarter from a challenging China environment and lower oil prices. In Performance Chemicals, Cabot anticipates a ‘meaningful EBIT improvement’ sequentially due to volume recovery in the speciality carbons
March 2019
FINANCIALS
and speciality compounds businesses, and a positive margin impact from lower feedstock prices, Keohane remarks. Stronger volumes and margins are expected in the second half of fiscal 2019, based on the improving forecast for auto production and the China economy. Based on the challenging first half coupled with stronger second half results, Cabot expects full year adjusted EPS to be in the range of $4.20 to $4.60. To counteract the business challenges, the company is focused on controlling costs, tightening capital expenditure and working capital levels, delivering on recently negotiated customer agreements and managing pricing in this dynamic environment, the company’s CEO reveals. More information: www.cabotcorp.com
Eastman reports higher annual sales but lower profit in 2018
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n 2018, Eastman Chemical Co recorded sales of US$10.15 billion, up more than 6% from a sales total of $9.55 billion in 2017, with revenue growth in all regions as a result of higher selling prices in three segments, steady volume growth and improved product mix, aided by favourable foreign exchange effects in 1H 2018. EBIT also increased year on year, by 1.4% to $1.55 billion, but the company’s net earnings declined by around 22% from $1.34 billion in 2017 to $1.08 billion last year. As with fellow US chemicals and polymers company LyondellBasell in the earlier item (p. 9), Eastman reports that it experienced a challenging end to the year, with reduced demand for speciality products in China as well as ‘the slow flow through of higher raw material costs in an environment of customer destocking beyond normal seasonality’ in the fourth quarter. Sales revenue increased slightly in the quarter, from $2.36 billion in 4Q 2017 to $2.38 billion a year later, as higher prices across three of Eastman’s four reporting segments were largely nullified by sales volume decreases in Chemical Intermediates and Advanced Materials. Reported EBIT was almost halved,
March 2019
dropping from $245 million in 4Q 2017 to $135 million in last year’s final quarter. In addition to the higher input costs and destocking already mentioned, weakened demand due to the uncertainty generated by the US-China trade dispute was an additional factor. Sales revenue for Eastman’s Additives & Functional Products segment, the company’s largest segment, increased by 9% year on year to $3.65 billion in 2018, largely due to higher sales volume (+4%), higher selling prices (+3%) across the segment and a favourable shift in foreign currency exchange rates (+2%). The higher sales volume was primarily in care chemicals, coatings additives, animal nutrition, and tyre additives and products in the segment that were previously reported in the Chemical Intermediates segment, the company explains. Reported EBIT included a charge for impairment of crop protection business goodwill in 2018 and coal gasification incident insurance in 2018 and costs in 2017. Reported EBIT declined primarily due to the goodwill impairment. Adjusted EBIT increased from $661 million in 2017 to $671 million last year due to the strong earnings growth in the first nine months of the year partially offset by the challenging fourth quarter already mentioned. Growth investments for the segment in 2018 were approximately $20 million higher than in 2017, Eastman reports. In 4Q 2018, sales revenue for Additives & Functional Products was $351 million, little changed compared to the previous year as higher selling prices attributed to rising raw material, energy and distribution costs were offset by the negative impact of foreign currency exchange rates. Reported EBIT included the previously mentioned impairment charge. Reported and adjusted EBIT for the segment declined in the quarter as higher selling prices were more than offset by higher raw material, energy and distribution costs. An unfavourable shift in product mix primarily attributed to above-average seasonal customer inventory destocking for speciality products in China and Europe, particularly for coatings and tyre additives products, also contributed to a decline in earnings, the company says. More information: www.eastman.com
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$20 million in 4Q 2018, $29 million lower than in the previous quarter. Compared with 3Q 2018, Compounding & Solutions results increased by approximately $15 million, with a full quarter’s contribution from the addition of the A. Schulman product lines partially offset by volume and margin declines in polypropylene compounds, the company reports. Advanced Polymers results decreased by around $15 million with declines in both margins and volume. Comparing the 4Q 2018 figures with those from 4Q 2017, EBITDA increased by $4 million. Compared with the 2017 quarter, Compounding & Solutions results increased by approximately $25 million. The addition of new product lines from the acquisition were again partially offset by volume and margin declines in polypropylene compounds. Advanced Polymers results were relatively unchanged, LyondellBasell says. For full-year 2018, the unit’s EBITDA amounted to $400 million, down from $438 million in 2017, and its annual operating income declined by almost 19% to $329 million. Transaction and integration costs related to the A. Schulman acquisition and assigned to the segment were $69 million during 2018. Compared with the previous year, Compounding & Solutions results increased by around $15 million in 2018. More information: www.lyondellbasell.com/advancedpolymersolutions
Cabot Corp reverses fiscal first quarter loss, grows sales
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or the first quarter of its 2019 fiscal year, Bostonbased Cabot Corp posted net sales of US$821 million, a 14% increase from net sales of $720 million a year earlier despite challenging conditions including softer automotive demand, customer inventory destocking and a weaker environment in China, which impacted results in the Performance Chemicals and Reinforcement Materials segments. Net income for the quarter ended 31 December 2018 was $69 million compared to a net loss of $122 million in 1Q fiscal 2018, which was impacted by a significant tax charge. The company reported ‘solid’ results for the Reinforcement Materials segment in 1Q fiscal 2019. Sales were $457 million, up 18% from segmental sales of $387 million in the same period a year earlier. EBIT was unchanged compared to the first quarter of fiscal 2018 at
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$62 million. Higher volumes and the benefit from improved pricing and product mix from 2018 tyre customer agreements were offset by the unfavourable effect of lower margins in China, Cabot reports. The margins in China were adversely impacted by lower pricing from weak automotive demand coupled with high inventory levels and the sharp decline of feedstock costs toward the end of the quarter. Globally, volumes in the Reinforcement Materials segment increased 1% year over year, primarily due to 3% gains in the Americas and Asia, partially offset by lower demand (-8%) in Europe, the Middle East & Africa (EMEA). The company’s Performance Chemicals segment achieved sales of $231 million in 1Q fiscal 2019, a small rise of about 1% versus sales of $229 million a year earlier. Sales of Performance Additives rose 5% to $167 million but Formulated Solutions sales fell about 8% to $64 million. In October 2018, Cabot realigned its business reporting structure under the Performance Chemicals segment and now combines the speciality carbons, fumed metal oxides and aerogel product lines into the Performance Additives business, and the speciality compounds and inkjet product lines into the Formulated Solutions business. The previous year’s Performance Chemicals segment revenues have been recast to reflect this realignment. The segment’s EBIT fell 23% to $36 million in 1Q fiscal 2019, compared to $47 million the previous year, due primarily to lower volumes and margins and higher costs related to growth investments, Cabot reports. Volumes decreased by 3% in the Performance Additives business and 2% in the Formulated Solutions business, impacted by the softer automotive demand in EMEA and China, and customer destocking resulting from declining polymer prices. Costs related to growth investments were primarily related to two new fumed silica plants that are scheduled to commence operations over the next 12 months, the company says. Commenting on Cabot’s outlook for fiscal 2019, CEO Sean Keohane says that the company remains confident in its ability to grow earnings despite the current business environment. ‘We expect customer destocking and the impact on automotive production from new emissions regulations in Europe to have less of an impact in the second quarter of fiscal year 2019 than in the first quarter’, he says. Reinforcement Materials is expected to benefit from the calendar year 2019 customer agreements, but will face headwinds in the second quarter from a challenging China environment and lower oil prices. In Performance Chemicals, Cabot anticipates a ‘meaningful EBIT improvement’ sequentially due to volume recovery in the speciality carbons
March 2019
FINANCIALS
and speciality compounds businesses, and a positive margin impact from lower feedstock prices, Keohane remarks. Stronger volumes and margins are expected in the second half of fiscal 2019, based on the improving forecast for auto production and the China economy. Based on the challenging first half coupled with stronger second half results, Cabot expects full year adjusted EPS to be in the range of $4.20 to $4.60. To counteract the business challenges, the company is focused on controlling costs, tightening capital expenditure and working capital levels, delivering on recently negotiated customer agreements and managing pricing in this dynamic environment, the company’s CEO reveals. More information: www.cabotcorp.com
Eastman reports higher annual sales but lower profit in 2018
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n 2018, Eastman Chemical Co recorded sales of US$10.15 billion, up more than 6% from a sales total of $9.55 billion in 2017, with revenue growth in all regions as a result of higher selling prices in three segments, steady volume growth and improved product mix, aided by favourable foreign exchange effects in 1H 2018. EBIT also increased year on year, by 1.4% to $1.55 billion, but the company’s net earnings declined by around 22% from $1.34 billion in 2017 to $1.08 billion last year. As with fellow US chemicals and polymers company LyondellBasell in the earlier item (p. 9), Eastman reports that it experienced a challenging end to the year, with reduced demand for speciality products in China as well as ‘the slow flow through of higher raw material costs in an environment of customer destocking beyond normal seasonality’ in the fourth quarter. Sales revenue increased slightly in the quarter, from $2.36 billion in 4Q 2017 to $2.38 billion a year later, as higher prices across three of Eastman’s four reporting segments were largely nullified by sales volume decreases in Chemical Intermediates and Advanced Materials. Reported EBIT was almost halved,
March 2019
dropping from $245 million in 4Q 2017 to $135 million in last year’s final quarter. In addition to the higher input costs and destocking already mentioned, weakened demand due to the uncertainty generated by the US-China trade dispute was an additional factor. Sales revenue for Eastman’s Additives & Functional Products segment, the company’s largest segment, increased by 9% year on year to $3.65 billion in 2018, largely due to higher sales volume (+4%), higher selling prices (+3%) across the segment and a favourable shift in foreign currency exchange rates (+2%). The higher sales volume was primarily in care chemicals, coatings additives, animal nutrition, and tyre additives and products in the segment that were previously reported in the Chemical Intermediates segment, the company explains. Reported EBIT included a charge for impairment of crop protection business goodwill in 2018 and coal gasification incident insurance in 2018 and costs in 2017. Reported EBIT declined primarily due to the goodwill impairment. Adjusted EBIT increased from $661 million in 2017 to $671 million last year due to the strong earnings growth in the first nine months of the year partially offset by the challenging fourth quarter already mentioned. Growth investments for the segment in 2018 were approximately $20 million higher than in 2017, Eastman reports. In 4Q 2018, sales revenue for Additives & Functional Products was $351 million, little changed compared to the previous year as higher selling prices attributed to rising raw material, energy and distribution costs were offset by the negative impact of foreign currency exchange rates. Reported EBIT included the previously mentioned impairment charge. Reported and adjusted EBIT for the segment declined in the quarter as higher selling prices were more than offset by higher raw material, energy and distribution costs. An unfavourable shift in product mix primarily attributed to above-average seasonal customer inventory destocking for speciality products in China and Europe, particularly for coatings and tyre additives products, also contributed to a decline in earnings, the company says. More information: www.eastman.com
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