- Email: [email protected]
A Schulman posts increased sales as earnings fall in 1Q fiscal 2016
FINANCIALS
company’s Agilon® performance silica. Jain confirms that the Delfzijl expansion remains on schedule to come online in mid-2016. In addition to these on-going expansions, PPG reports that it is also evaluating additional significant silica expansion projects in Europe and North America based on growing demand. PPG claims to have pioneered synthetic precipitated silica products, becoming one of the first manufacturers to bring them to the marketplace in the 1930s. As part of the company’s speciality coatings and materials business, the silica products group serves customers through a global network of manufacturing, research and technical-support facilities. Contact: PPG Industries Inc, Pittsburgh, PA, USA. Tel: +1 412 434 3131, Web: www.ppg.com
FINANCIALS Eastman Chemical reports earnings growth in 2015
F
or full-year 2015, global speciality chemicals company Eastman Chemical Co achieved net earnings of US$854 million on sales revenue of $9.65 billion. Compared to the previous year, net earnings were up almost 13%, from $757 million, while sales increased by 1% from $9.53 billion as lower selling prices partially offset additional sales from acquired businesses. The company delivered its sixth consecutive year of solid earnings growth and record cash from operations in 2015, reports Eastman’s chairman and CEO Mark Costa. ‘These results reflect the strength and robustness of our strategy to transform towards a speciality portfolio as we managed through a very challenging global business environment. We benefited from volume growth in speciality businesses, mix upgrade in Advanced Materials from growth of highvalue, innovative products, accretion from high-quality speciality acquisitions and continued disciplined cost management’, he says. Excluding non-core items, operating earnings for 2015 were $1.7 billion, a 6% increase compared with 2014, primarily due to earnings from acquired businesses, and lower raw material and energy costs exceeding lower selling prices. Reported 2015 operating earnings were $1.38 billion compared with $1.16 billion a year earlier.
March 2016
Sales revenue for the fourth quarter of 2015 was $2.22 billion, down some 5% from $2.35 billion for 4Q 2014. The decline was primarily due to lower selling prices more than offsetting sales revenue from the Taminco and Commonwealth businesses acquired in December 2014. Reported 4Q 2015 operating earnings were $172 million compared with $27 million for the same period in 2014. Eastman’s Adhesives & Plasticizers segment generated sales of $1.21 billion in 2015, an 11% decrease from $1.36 billion the previous year due to lower selling prices for plasticizers and an unfavourable shift in foreign currency exchange rates. The lower plasticizer selling prices were primarily in response to lower raw material and energy costs and continued competitive pressure, the company reports. The segment’s operating earnings increased to $239 million for 2015 from $196 million in 2014, primarily due to lower raw material and energy costs exceeding lower selling prices, partially offset by propane hedges and unfavourable currency effects. In 4Q 2015, sales for the Adhesives & Plasticizers segment totalled $272 million, down 13% from $313 million in 4Q 2014 primarily due to lower selling prices. Selling prices for plasticizers continued to be affected by competitive pressure resulting from weak demand in Asia Pacific, as well as lower raw material and energy costs. Operating earnings increased to $49 million for 4Q 2015 compared with $41 million the previous year. However, sales and operating earnings for the Fibers and Specialty Fluids & Intermediates segments declined year on year in both reporting periods. Contact: Eastman Chemical Co, Kingsport, TN, USA. Tel: +1 423 229 2000, Web: www.eastman.com
A Schulman posts increased sales as earnings fall in 1Q fiscal 2016
F
or its fiscal 2016 first quarter ended 30 November 2015, Akron-based A. Schulman, Inc posted net sales of US$649.2 million, an increase of 5.6% compared with $615.1 million in the same quarter a year earlier. Foreign currency translation negatively impacted the total by $62 million, or 10% of sales. Net sales from the acquired Citadel Plastics business contributed $111.1 million of revenue during the quarter. Excluding the acquisition and currency effects, net sales declined by 2.4% as the company experienced lower volumes in its US
Additives for Polymers
9
MARKETS
and Canada (USCAN) segment’s commodity product and service offerings. Adjusted gross margin in the first quarter as a percent of net sales improved to 16.8% compared with 14.2% in the prior-year period due to a stronger customer shift to higher value-added product sales and mix improvement from higher margin product sales from the Citadel acquisition. Schulman reported net income of $7.50 million in 1Q fiscal 2016, compared with $13.38 million the previous year. Net sales for the Europe, Middle East and Africa (EMEA) segment were $328.1 million in 1Q 2016 compared with $371.2 million in the same prior-year period. Excluding the unfavourable impact of foreign currency translation of $44.2 million, legacy revenues were consistent with fiscal 4Q 2015 results. Net sales for the USCAN segment were $178.3 million in the quarter, compared with $144.7 million in the prioryear period. Excluding the $59.1 million of acquired Citadel revenue, legacy revenues fell 17.6%. ‘We experienced USCAN revenue and volume weakness in our Masterbatch and Specialty Powders business units as well as Engineered Plastics. The declines in Masterbatch and Specialty Powders were primarily driven by certain tolling customers who destocked their inventory and shifted some production in-house’, says president and CEO Bernard Rzepka. The decline in Engineered Plastics is a result of the company’s ‘intense focus’ to resolve a quality reporting matter concerning two former Citadel manufacturing facilities that were once part of Lucent Polymers, Rzepka explains. Corrective actions incurred a total of $4.9 million of costs related to this matter that negatively impacted Schulman’s operating results for the first quarter of fiscal 2016. Despite the contraction in these businesses, USCAN adjusted gross margin was 17.0%, steady with the previous year, as the Citadel integration and the company’s focus on added-value products continue to bear fruit, Schulman says. Latin America’s (LATAM’s) net sales for 1Q fiscal 2016 were $45.2 million. Excluding unfavourable currency effects of $10.6 million, core revenues increased nearly 21%, up significantly from the 12.7% growth in 4Q 2015. LATAM adjusted gross profit of 21.5% was nearly double that of the 12.2% in the prior year, driven by market expansion and operational improvements, Schulman says. Asia Pacific (APAC) reported net sales were $45.7 million. Foreign exchange had a negative impact of $6.7 million. APAC adjusted gross profit margin was 17.2%, up 350 basis points from the prior period due to the benefits of several strategic focus initiatives to improve product mix. ‘Fiscal 2016 has begun on a challenging note, with weakening macroeconomic conditions across several regions,
10
Additives for Polymers
continued pressure in the oil, energy and material markets, ongoing currency headwinds, and the costs of our internal actions to resolve the Lucent matter’, reports Rzepka. To that end, Schulman is undertaking additional cost reduction actions company-wide, designed to more than offset the first quarter shortfall, he says. The company is therefore maintaining its fiscal 2016 earnings guidance range of $2.80 to $2.85 per diluted share. In other news, Schulman reports that its new masterbatch project in Turkey is ‘on track’. The first phase involves the opening of a warehouse in the Istanbul area, bringing in products from its sites in Belgium and France. This will be followed by the establishment of a masterbatch production facility that, once operational, will primarily serve the food and industrial packaging sectors. Contact: A. Schulman, Inc, Akron, OH, USA. Tel: +1 330 666 3751, Web: www.aschulman.com
MARKETS Global plastics additives market forecast to be worth US$64.6 billion by 2021
T
he global market for plastics additives was valued at US$48.2 billion in 2015. This market is estimated to grow from nearly $50.6 billion in 2016 to $64.6 billion by 2021 with a compound annual growth rate (CAGR) of 5.0% for the 2016–2021 period, according to a new research study published by US-based BCC Research. According to the report, entitled Global Markets for Plastics Additives (Report Code: PLS022E), property modifiers are the largest segment of this market and will grow from nearly $27.9 billion in 2016 to nearly $35.9 billion by 2021 with a CAGR of 5.2%. The second-largest segment, property extenders, will grow from $9.3 billion in 2016 to $11.9 billion by 2021 with a CAGR of 5.1%. From 2002 to 2007, the plastics industry in developed countries experienced reduced profit margins, due to rapidly increasing feedstock prices, product life cycle maturity, loss of market share to emerging markets and regu-
March 2016
company’s Agilon® performance silica. Jain confirms that the Delfzijl expansion remains on schedule to come online in mid-2016. In addition to these on-going expansions, PPG reports that it is also evaluating additional significant silica expansion projects in Europe and North America based on growing demand. PPG claims to have pioneered synthetic precipitated silica products, becoming one of the first manufacturers to bring them to the marketplace in the 1930s. As part of the company’s speciality coatings and materials business, the silica products group serves customers through a global network of manufacturing, research and technical-support facilities. Contact: PPG Industries Inc, Pittsburgh, PA, USA. Tel: +1 412 434 3131, Web: www.ppg.com
FINANCIALS Eastman Chemical reports earnings growth in 2015
F
or full-year 2015, global speciality chemicals company Eastman Chemical Co achieved net earnings of US$854 million on sales revenue of $9.65 billion. Compared to the previous year, net earnings were up almost 13%, from $757 million, while sales increased by 1% from $9.53 billion as lower selling prices partially offset additional sales from acquired businesses. The company delivered its sixth consecutive year of solid earnings growth and record cash from operations in 2015, reports Eastman’s chairman and CEO Mark Costa. ‘These results reflect the strength and robustness of our strategy to transform towards a speciality portfolio as we managed through a very challenging global business environment. We benefited from volume growth in speciality businesses, mix upgrade in Advanced Materials from growth of highvalue, innovative products, accretion from high-quality speciality acquisitions and continued disciplined cost management’, he says. Excluding non-core items, operating earnings for 2015 were $1.7 billion, a 6% increase compared with 2014, primarily due to earnings from acquired businesses, and lower raw material and energy costs exceeding lower selling prices. Reported 2015 operating earnings were $1.38 billion compared with $1.16 billion a year earlier.
March 2016
Sales revenue for the fourth quarter of 2015 was $2.22 billion, down some 5% from $2.35 billion for 4Q 2014. The decline was primarily due to lower selling prices more than offsetting sales revenue from the Taminco and Commonwealth businesses acquired in December 2014. Reported 4Q 2015 operating earnings were $172 million compared with $27 million for the same period in 2014. Eastman’s Adhesives & Plasticizers segment generated sales of $1.21 billion in 2015, an 11% decrease from $1.36 billion the previous year due to lower selling prices for plasticizers and an unfavourable shift in foreign currency exchange rates. The lower plasticizer selling prices were primarily in response to lower raw material and energy costs and continued competitive pressure, the company reports. The segment’s operating earnings increased to $239 million for 2015 from $196 million in 2014, primarily due to lower raw material and energy costs exceeding lower selling prices, partially offset by propane hedges and unfavourable currency effects. In 4Q 2015, sales for the Adhesives & Plasticizers segment totalled $272 million, down 13% from $313 million in 4Q 2014 primarily due to lower selling prices. Selling prices for plasticizers continued to be affected by competitive pressure resulting from weak demand in Asia Pacific, as well as lower raw material and energy costs. Operating earnings increased to $49 million for 4Q 2015 compared with $41 million the previous year. However, sales and operating earnings for the Fibers and Specialty Fluids & Intermediates segments declined year on year in both reporting periods. Contact: Eastman Chemical Co, Kingsport, TN, USA. Tel: +1 423 229 2000, Web: www.eastman.com
A Schulman posts increased sales as earnings fall in 1Q fiscal 2016
F
or its fiscal 2016 first quarter ended 30 November 2015, Akron-based A. Schulman, Inc posted net sales of US$649.2 million, an increase of 5.6% compared with $615.1 million in the same quarter a year earlier. Foreign currency translation negatively impacted the total by $62 million, or 10% of sales. Net sales from the acquired Citadel Plastics business contributed $111.1 million of revenue during the quarter. Excluding the acquisition and currency effects, net sales declined by 2.4% as the company experienced lower volumes in its US
Additives for Polymers
9
MARKETS
and Canada (USCAN) segment’s commodity product and service offerings. Adjusted gross margin in the first quarter as a percent of net sales improved to 16.8% compared with 14.2% in the prior-year period due to a stronger customer shift to higher value-added product sales and mix improvement from higher margin product sales from the Citadel acquisition. Schulman reported net income of $7.50 million in 1Q fiscal 2016, compared with $13.38 million the previous year. Net sales for the Europe, Middle East and Africa (EMEA) segment were $328.1 million in 1Q 2016 compared with $371.2 million in the same prior-year period. Excluding the unfavourable impact of foreign currency translation of $44.2 million, legacy revenues were consistent with fiscal 4Q 2015 results. Net sales for the USCAN segment were $178.3 million in the quarter, compared with $144.7 million in the prioryear period. Excluding the $59.1 million of acquired Citadel revenue, legacy revenues fell 17.6%. ‘We experienced USCAN revenue and volume weakness in our Masterbatch and Specialty Powders business units as well as Engineered Plastics. The declines in Masterbatch and Specialty Powders were primarily driven by certain tolling customers who destocked their inventory and shifted some production in-house’, says president and CEO Bernard Rzepka. The decline in Engineered Plastics is a result of the company’s ‘intense focus’ to resolve a quality reporting matter concerning two former Citadel manufacturing facilities that were once part of Lucent Polymers, Rzepka explains. Corrective actions incurred a total of $4.9 million of costs related to this matter that negatively impacted Schulman’s operating results for the first quarter of fiscal 2016. Despite the contraction in these businesses, USCAN adjusted gross margin was 17.0%, steady with the previous year, as the Citadel integration and the company’s focus on added-value products continue to bear fruit, Schulman says. Latin America’s (LATAM’s) net sales for 1Q fiscal 2016 were $45.2 million. Excluding unfavourable currency effects of $10.6 million, core revenues increased nearly 21%, up significantly from the 12.7% growth in 4Q 2015. LATAM adjusted gross profit of 21.5% was nearly double that of the 12.2% in the prior year, driven by market expansion and operational improvements, Schulman says. Asia Pacific (APAC) reported net sales were $45.7 million. Foreign exchange had a negative impact of $6.7 million. APAC adjusted gross profit margin was 17.2%, up 350 basis points from the prior period due to the benefits of several strategic focus initiatives to improve product mix. ‘Fiscal 2016 has begun on a challenging note, with weakening macroeconomic conditions across several regions,
10
Additives for Polymers
continued pressure in the oil, energy and material markets, ongoing currency headwinds, and the costs of our internal actions to resolve the Lucent matter’, reports Rzepka. To that end, Schulman is undertaking additional cost reduction actions company-wide, designed to more than offset the first quarter shortfall, he says. The company is therefore maintaining its fiscal 2016 earnings guidance range of $2.80 to $2.85 per diluted share. In other news, Schulman reports that its new masterbatch project in Turkey is ‘on track’. The first phase involves the opening of a warehouse in the Istanbul area, bringing in products from its sites in Belgium and France. This will be followed by the establishment of a masterbatch production facility that, once operational, will primarily serve the food and industrial packaging sectors. Contact: A. Schulman, Inc, Akron, OH, USA. Tel: +1 330 666 3751, Web: www.aschulman.com
MARKETS Global plastics additives market forecast to be worth US$64.6 billion by 2021
T
he global market for plastics additives was valued at US$48.2 billion in 2015. This market is estimated to grow from nearly $50.6 billion in 2016 to $64.6 billion by 2021 with a compound annual growth rate (CAGR) of 5.0% for the 2016–2021 period, according to a new research study published by US-based BCC Research. According to the report, entitled Global Markets for Plastics Additives (Report Code: PLS022E), property modifiers are the largest segment of this market and will grow from nearly $27.9 billion in 2016 to nearly $35.9 billion by 2021 with a CAGR of 5.2%. The second-largest segment, property extenders, will grow from $9.3 billion in 2016 to $11.9 billion by 2021 with a CAGR of 5.1%. From 2002 to 2007, the plastics industry in developed countries experienced reduced profit margins, due to rapidly increasing feedstock prices, product life cycle maturity, loss of market share to emerging markets and regu-
March 2016