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2Q 2013 sales and earnings decline at Chemtura
FINANCIALS
attributable to common shareholders of $2.1 million in 2Q 2013, compared with net income of $1.9 million in the prior-year quarter. Adjusted for special items, which totalled $14.3 million in 2Q 2013 largely as a result of restructuring and divestments, net income from continuing operations was $12.1 million in 2Q 2013, up from $8.6 million in 2Q 2012. Value-added sales, which exclude precious metals, were $408 million, down 3.8% from $424 million in 2Q 2013. The reduction in sales resulted primarily from Ferro’s divestiture of its solar paste assets in 1Q 2013 and its borates mining operation in Argentina during 2Q 2012, coupled with product de-selection in the Polymer Additives segment. Adjusting for the impact of the divested operations, value-added sales were down 1.2%. Adjusted sales in the Pigments, Powders and Oxides segment increased by approximately $2 million to $39 million, while sales in the Performance Colors and Glass, Performance Coatings and Specialty Plastics segments were nearly flat. However, Polymer Additives sales declined by about $6.6 million to $76.8 million, due to expected changes in environmental regulations for certain plasticizers, which are resulting in product replacement by some customers in the USA and Europe. To provide alternatives to these plasticizers, Ferro is installing dibenzoates and benzoic acid production capabilities at its operations in Antwerp, Belgium [ADPO, August 2013]. Adjusted EBITDA was approximately $38 million in 2Q 2013, up from $33 million last year. EBITDA margins, based on value-added sales, were 9.3% and 7.9%, respectively. Gross profit was $88 million during 2Q 2013, compared with $86 million a year earlier. Adjusted gross profit as a percentage of value-added sales was 21.9% versus 20.4% in 2Q 2012. Gross margins benefitted from the execution of cost-saving initiatives and recent reductions in raw material pricing relative to current pricing levels, Ferro reports. President and CEO Peter Thomas says that Ferro continues ‘to make good progress’ on its value creation strategy, resulting in improved gross profit margins, lower SG&A costs and increased adjusted earnings. The company is ‘on track’ with its cost-saving initiatives and expects $30 million of savings in 2013 and $70 million in 2014, he reports. In related news, A. Schulman has dropped its bid to acquire Ferro some four and a half months after offering $563 million. Schulman first contacted Ferro in November 2012 and expressed its interest in a letter in
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Additives for Polymers
February, but was rebuffed. A formal offer in March was also rejected [ibid., May 2013]. Schulman’s CEO Joe Gingo, speaking during the company’s 3Q 2013 results conference call, said that Ferro’s board had had ‘ample time’ to initiate a discussion on the offer but as this had not happened Schulman has ‘decided to look elsewhere for acquisition opportunities’. Contact: Ferro Corp, Mayfield Heights, OH, USA. Tel: +1 216 875 5600, Web: www.ferro.com Or contact: A. Schulman, Inc, Akron, OH, USA. Tel: +1 330 666 3751, Web: www.aschulman.com
2Q 2013 sales and earnings decline at Chemtura
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hemtura Corp reported net sales of US$735 million for the second quarter of 2013, down 1% from $741 million in 2Q 2012 as a result of lower selling prices and negative currency effects. Net earnings from continuing operations attributable to Chemtura on a GAAP basis were $47 million, an 11% decline from $53 million recorded a year earlier. Operating income was down 15% year on year to $66 million. The company’s Industrial Performance Products, Consumer Products and Chemtura AgroSolutions segments delivered year-over-year improvement in 2Q 2013 but this was not sufficient to fully offset the weaker performance of Industrial Engineered Products, and operating income therefore fell short of 2Q 2012 levels, comments Chemtura CEO Craig A. Rogerson. Industrial Engineered Products’ net sales decreased $35 million or 15% to $201 million, primarily reflecting a $24 million decrease in sales volumes, $10 million in lower selling prices and $1 million from unfavourable foreign currency translation. Operating income of $13 million decreased $25 million or 66% from 2Q 2012. This decline reflected lower selling prices, the effects of lower sales volume and product mix changes, and unfavourable manufacturing costs and variances, Chemtura reports. The lower volumes and selling prices were primarily associated with brominated flame retardants for insulation foam and electronic applications. Demand and pricing for these flame retardants stabilized during the quarter after the
October 2013
FINANCIALS
declines in 1Q 2013, but now reflecting a full quarter’s impact of those declines, operating income was sequentially lower, Rogerson continues. Sales of flame retardants used in electronic applications showed modest sequential improvement for the third consecutive quarter, but were still lower than 2Q 2012. Prices for bromine-based products in Asia remained at the weaker levels seen in recent quarters as Chinese bromine producers continue to seek the sale of excess production capacity. Industrial Performance Products’ net sales increased by 8% year on year to $254 million in 2Q 2013 as a result of a $15 million increase in sales volume and a $4 million year-over-year increase in selling prices. Operating income increased 11% to $31 million, benefiting from the higher selling prices and $3 million in higher volume and product mix changes, offset by higher raw material costs of $3 million and other costs of $1 million. The sale of the segment’s former antioxidant and UV stabilizers business was completed on 30 April 2013. Rogerson says the company continues to ‘actively work on portfolio transformation initiatives’ and, in this ‘lacklustre industrial demand environment’, is focused on seeking additional actions it can take to reduce cost and improve efficiency. Contact: Chemtura Corp, Middlebury, CT, USA. Tel: +1 203 573 2000, Web: www.chemtura.com
Eastman reports strong earnings in second quarter of 2013
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ennessee-based Eastman Chemical Co reported sales revenue for the second quarter of 2013 of US$2.44 billion, a 32% increase compared to $1.85 billion in 2Q 2012. The 2013 figure includes sales revenue from the Solutia businesses acquired in July 2012. Pro forma combined sales revenue increased 3% due to higher sales volume across most segments, the company says.
October 2013
Operating earnings in 2Q 2013 were $428 million compared with $317 million in 2Q 2012. Pro forma combined operating earnings, excluding special items, were $454 million in 2Q 2013 compared with $403 million in 2Q 2012. Pro forma combined operating earnings increased primarily due to higher sales volume across most segments and higher capacity utilization, which led to lower unit costs. Net earnings attributable to Eastman were $264 million in 2Q 2013, up from $179 million the previous year. ‘The great progress we’ve made over the past several years to improve our portfolio, including the acquisition of Solutia, shows in the continuing strength of our earnings’, comments CEO Jim Rogers. ‘Second-quarter earnings were our best ever and position us for a fourth consecutive year of doubledigit earnings growth’, he adds. The performance of the Additives & Functional Products segment was boosted in 2Q 2013 by the acquired Solutia rubber additives product lines and the inclusion of certain products primarily sold into the tyres market that were formerly reported in the Adhesives & Plasticizers segment. Pro forma combined sales revenue of $430 million increased from $423 million in 2Q 2012 primarily due to higher sales volume. Pro forma combined operating earnings declined to $105 million in 2Q 2013 compared with $107 million a year earlier. Sales revenue for the Adhesives & Plasticizers segment declined in 2Q 2013 to $339 million from $372 million in 2Q 2012 due to lower sales volume, primarily in adhesives resins, and lower selling prices in both plasticizers and adhesives resins. Lower sales volume in adhesives resins was partially offset by continued substitution of phthalate plasticizers with non-phthalate plasticizers. Lower selling prices for plasticizers were primarily attributed to competitive pressures resulting from continued weakened demand in Asia and Europe. Operating earnings declined to $50 million from $72 million in 2Q 2012. Contact: Eastman Chemical Co, Kingsport, TN, USA. Tel: +1 423 229 2000, Web: www.eastman.com
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attributable to common shareholders of $2.1 million in 2Q 2013, compared with net income of $1.9 million in the prior-year quarter. Adjusted for special items, which totalled $14.3 million in 2Q 2013 largely as a result of restructuring and divestments, net income from continuing operations was $12.1 million in 2Q 2013, up from $8.6 million in 2Q 2012. Value-added sales, which exclude precious metals, were $408 million, down 3.8% from $424 million in 2Q 2013. The reduction in sales resulted primarily from Ferro’s divestiture of its solar paste assets in 1Q 2013 and its borates mining operation in Argentina during 2Q 2012, coupled with product de-selection in the Polymer Additives segment. Adjusting for the impact of the divested operations, value-added sales were down 1.2%. Adjusted sales in the Pigments, Powders and Oxides segment increased by approximately $2 million to $39 million, while sales in the Performance Colors and Glass, Performance Coatings and Specialty Plastics segments were nearly flat. However, Polymer Additives sales declined by about $6.6 million to $76.8 million, due to expected changes in environmental regulations for certain plasticizers, which are resulting in product replacement by some customers in the USA and Europe. To provide alternatives to these plasticizers, Ferro is installing dibenzoates and benzoic acid production capabilities at its operations in Antwerp, Belgium [ADPO, August 2013]. Adjusted EBITDA was approximately $38 million in 2Q 2013, up from $33 million last year. EBITDA margins, based on value-added sales, were 9.3% and 7.9%, respectively. Gross profit was $88 million during 2Q 2013, compared with $86 million a year earlier. Adjusted gross profit as a percentage of value-added sales was 21.9% versus 20.4% in 2Q 2012. Gross margins benefitted from the execution of cost-saving initiatives and recent reductions in raw material pricing relative to current pricing levels, Ferro reports. President and CEO Peter Thomas says that Ferro continues ‘to make good progress’ on its value creation strategy, resulting in improved gross profit margins, lower SG&A costs and increased adjusted earnings. The company is ‘on track’ with its cost-saving initiatives and expects $30 million of savings in 2013 and $70 million in 2014, he reports. In related news, A. Schulman has dropped its bid to acquire Ferro some four and a half months after offering $563 million. Schulman first contacted Ferro in November 2012 and expressed its interest in a letter in
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Additives for Polymers
February, but was rebuffed. A formal offer in March was also rejected [ibid., May 2013]. Schulman’s CEO Joe Gingo, speaking during the company’s 3Q 2013 results conference call, said that Ferro’s board had had ‘ample time’ to initiate a discussion on the offer but as this had not happened Schulman has ‘decided to look elsewhere for acquisition opportunities’. Contact: Ferro Corp, Mayfield Heights, OH, USA. Tel: +1 216 875 5600, Web: www.ferro.com Or contact: A. Schulman, Inc, Akron, OH, USA. Tel: +1 330 666 3751, Web: www.aschulman.com
2Q 2013 sales and earnings decline at Chemtura
C
hemtura Corp reported net sales of US$735 million for the second quarter of 2013, down 1% from $741 million in 2Q 2012 as a result of lower selling prices and negative currency effects. Net earnings from continuing operations attributable to Chemtura on a GAAP basis were $47 million, an 11% decline from $53 million recorded a year earlier. Operating income was down 15% year on year to $66 million. The company’s Industrial Performance Products, Consumer Products and Chemtura AgroSolutions segments delivered year-over-year improvement in 2Q 2013 but this was not sufficient to fully offset the weaker performance of Industrial Engineered Products, and operating income therefore fell short of 2Q 2012 levels, comments Chemtura CEO Craig A. Rogerson. Industrial Engineered Products’ net sales decreased $35 million or 15% to $201 million, primarily reflecting a $24 million decrease in sales volumes, $10 million in lower selling prices and $1 million from unfavourable foreign currency translation. Operating income of $13 million decreased $25 million or 66% from 2Q 2012. This decline reflected lower selling prices, the effects of lower sales volume and product mix changes, and unfavourable manufacturing costs and variances, Chemtura reports. The lower volumes and selling prices were primarily associated with brominated flame retardants for insulation foam and electronic applications. Demand and pricing for these flame retardants stabilized during the quarter after the
October 2013
FINANCIALS
declines in 1Q 2013, but now reflecting a full quarter’s impact of those declines, operating income was sequentially lower, Rogerson continues. Sales of flame retardants used in electronic applications showed modest sequential improvement for the third consecutive quarter, but were still lower than 2Q 2012. Prices for bromine-based products in Asia remained at the weaker levels seen in recent quarters as Chinese bromine producers continue to seek the sale of excess production capacity. Industrial Performance Products’ net sales increased by 8% year on year to $254 million in 2Q 2013 as a result of a $15 million increase in sales volume and a $4 million year-over-year increase in selling prices. Operating income increased 11% to $31 million, benefiting from the higher selling prices and $3 million in higher volume and product mix changes, offset by higher raw material costs of $3 million and other costs of $1 million. The sale of the segment’s former antioxidant and UV stabilizers business was completed on 30 April 2013. Rogerson says the company continues to ‘actively work on portfolio transformation initiatives’ and, in this ‘lacklustre industrial demand environment’, is focused on seeking additional actions it can take to reduce cost and improve efficiency. Contact: Chemtura Corp, Middlebury, CT, USA. Tel: +1 203 573 2000, Web: www.chemtura.com
Eastman reports strong earnings in second quarter of 2013
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ennessee-based Eastman Chemical Co reported sales revenue for the second quarter of 2013 of US$2.44 billion, a 32% increase compared to $1.85 billion in 2Q 2012. The 2013 figure includes sales revenue from the Solutia businesses acquired in July 2012. Pro forma combined sales revenue increased 3% due to higher sales volume across most segments, the company says.
October 2013
Operating earnings in 2Q 2013 were $428 million compared with $317 million in 2Q 2012. Pro forma combined operating earnings, excluding special items, were $454 million in 2Q 2013 compared with $403 million in 2Q 2012. Pro forma combined operating earnings increased primarily due to higher sales volume across most segments and higher capacity utilization, which led to lower unit costs. Net earnings attributable to Eastman were $264 million in 2Q 2013, up from $179 million the previous year. ‘The great progress we’ve made over the past several years to improve our portfolio, including the acquisition of Solutia, shows in the continuing strength of our earnings’, comments CEO Jim Rogers. ‘Second-quarter earnings were our best ever and position us for a fourth consecutive year of doubledigit earnings growth’, he adds. The performance of the Additives & Functional Products segment was boosted in 2Q 2013 by the acquired Solutia rubber additives product lines and the inclusion of certain products primarily sold into the tyres market that were formerly reported in the Adhesives & Plasticizers segment. Pro forma combined sales revenue of $430 million increased from $423 million in 2Q 2012 primarily due to higher sales volume. Pro forma combined operating earnings declined to $105 million in 2Q 2013 compared with $107 million a year earlier. Sales revenue for the Adhesives & Plasticizers segment declined in 2Q 2013 to $339 million from $372 million in 2Q 2012 due to lower sales volume, primarily in adhesives resins, and lower selling prices in both plasticizers and adhesives resins. Lower sales volume in adhesives resins was partially offset by continued substitution of phthalate plasticizers with non-phthalate plasticizers. Lower selling prices for plasticizers were primarily attributed to competitive pressures resulting from continued weakened demand in Asia and Europe. Operating earnings declined to $50 million from $72 million in 2Q 2012. Contact: Eastman Chemical Co, Kingsport, TN, USA. Tel: +1 423 229 2000, Web: www.eastman.com
Additives for Polymers
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