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Chemtura reports 2Q 2010 results and progress with bankruptcy exit plan
FINANCIALS
Strategic positioning pays off for Lanxess in 2Q 2010
G
ermany’s Lanxess reported significantly better-than-expected results in the second quarter of 2010, which it attributes to its strategic positioning in the emerging markets. The company posted sales of E1.83 billion, up 48% from E1.238 billion in 2Q 2009, primarily due to higher volumes in key customer industries and positive currency effects in the form of the weak Euro. Quarterly net profit totalled E131 million compared to E17 million a year earlier. The company more than doubled EBITDA pre exceptionals year on year to E269 million in 2Q 2010, while EBITDA margin pre exceptionals rose to 14.7% from 9.0% a year ago. Higher raw material costs were fully passed on to customers through product price increases. Europe (excluding Germany), the Middle East and Africa remained the largest sales region in 2Q 2010, with 29% of group sales. The region increased topline growth by 37% to E531 million, driven by the Performance Polymers and Performance Chemicals segments. Sales in Germany rose 27% to E325 million (18% of total). Latin America recorded the strongest year-on-year growth for the quarter, with sales more than doubling to E245 million. Sales grew by 68% to E313 million in North America and by 36% to E414 million in the Asia-Pacific. In the Performance Chemicals segment, 2Q sales rose 40% year on year to E537 million, with all seven business units showing volume improvements. EBITDA pre exceptionals rose 91% to E84 million. Due to the positive business development, Lanxess says it will partly put on hold its ‘Challenge09-12’ package of global measures, which were introduced to mitigate the effects of the economic crisis. However, the company will not completely abandon its flexible cost structures as tough trading conditions still exist in several of the business units and countries.
Contact: Lanxess, Leverkusen, Germany. Tel: +49 214 30 33333, Web: www.lanxess.com
10
Additives for Polymers
Chemtura reports 2Q 2010 results and progress with bankruptcy exit plan
C
hemtura Corp reported sales of US$767 million for the second quarter of 2010, up 22% from $629 million in 2Q 2009. The company posted an operating profit of $122 million for the quarter, but a net loss from continuing operations on a GAAP basis of $41 million. This compares to an operating loss of $10 million and a net loss of $56 million for the same period the previous year. The company’s Industrial Performance Products division, which includes its antioxidant/UV stabilizer polymer additives activities, reported 2Q sales up 29% to $313 million compared to 2Q 2009, driven mainly by higher selling prices and increased sales volumes. Volumes improved primarily as a result of increased customer demand across all business segments driven by improved economic conditions, and strong growth in the Asia-Pacific region. Operating profit was up by $17 million to $38 million, due to increased sales volume, lower manufacturing costs and higher selling prices, partially offset by higher raw material and energy costs. Chemtura’s Industrial Engineered Products business, which includes its flame retardants activities, reported a 44% increase in sales versus 2Q 2009, to $187 million. Demand for some products sold to electronic applications has continued to demonstrate year-over-year improvement with some recovery evident in building and construction, and consumer durable polymer applications, the company says. Operating profit rose by $10 million to $7 million but was impacted by charges resulting from restructuring initiatives in this segment. As part of the process to emerge from Chapter 11 protection, Chemtura filed a plan of reorganization and a related disclosure statement with the bankruptcy court on 17 June (ADPO, August 2010), with subsequent revisions on 9 and 20 July. The court approved the adequacy of the disclosure statement on 5 August but the company is still awaiting confirmation of the reorganization plan. Meanwhile, on 27 August Chemtura completed a private placement offering of $455 million in unsecured senior notes due 2018, and on the same date entered into a previously announced $295 million senior term loan facility. Both measures are intended to fund its Chapter 11 exit financing package once the reorganization plan is confirmed; until that time the net proceeds of the notes offering and the loan have been placed into segregated escrow accounts.
October 2010
MARKETS
Contact: Chemtura Corp, Middlebury, CT, USA. Tel: +1 203 573 2000, Web: www.chemtura.com
MARKETS Annual growth of 3.9% to 2014 forecast for functional additives in plastic packaging
A
new study by Pira International predicts that the global market for functional additives and barrier coatings for plastic packaging will grow at a compound annual growth rate (CAGR) of 4.3% in the period 2009 to 2014. This values the combined sector at US$752 million (c. E540 million) in 2014 compared to $609 million in 2009. Within that, demand for functional plastic additives for packaging is expected to grow at the slightly more modest rate of 3.9%/year on average to around $325 million in 2014. The Future of Functional Additives and Barrier Coatings for Plastic Packaging to 2014 draws on extensive primary research and desk research, including interviews with key players along the supply chain, information from the Pira International database, company websites, market reports and company reports. The report analyses the market as a whole and by type of coating and additive, end-use sector and geographic region. Key market drivers, trends and technological developments are also covered in detail. The report finds that the largest end-use segments for functional additives and barrier coatings in packaging are electronics and electrical goods, and the snack foods market. In value terms, snack foods accounted for 10.5% of the market for additives and barrier coatings for plastic packaging in 2009. Dried foods accounted for a further 10.2%, confectionery 9.0%, baked goods 8.1% and beverages 7.8%. Key drivers for the forecast growth, which is predicted to outstrip growth in the overall packaging market, are
October 2010
increasing consumer demand for convenience and product safety. ‘There is a rapidly increasing demand for packaging materials that give even greater protection to their contents’, the report says. Among the additive types used in packaging applications, Pira expects antifog and antimicrobial additives to have the best development prospects. The report considers a range of factors that influence current and future demand. Busier lifestyles among consumers and the increasing number of single-person and single-parent households will drive demand for smaller packs, ready meals and frozen food. In turn this will spur demand for barrier coatings and functional additives. For example, there is growing demand for smaller PET bottles, which have a higher surface area per unit volume and therefore require better protection than larger bottles, says Pira. The growing footprint of large retail chains in developing markets is also expected to stimulate the sales of packaged food. Mounting pressure to lessen the environmental impact of packaging is likely to result in a reduction in packaging weight by switching to thinner materials, which will in turn drive demand for functional additives; the use of barrier coatings is also expected to increase thanks to its relative ease of recycling as opposed to older technologies such as multilayer bottles, Pira finds. On the negative side, the global recession has resulted in a fall in sales for a number of products requiring more sophisticated packaging, such as cosmetics, snack foods, confectionery and ready meals, and this in turn has had a detrimental impact on the demand for functional additives and barrier coatings. In terms of geographical area, growth rates for these products in Western Europe and North American are slower than the global average. The highest growth rates are in China and India – more than 10%. In 2009, Asia-Pacific took the largest share of the additives and barrier market (42%), followed by North America (24.5%), Western Europe (19.9%), Central and Eastern Europe (5.4%), South America (3.9%) and the rest of the world (4.3%). The Future of Functional Additives and Barrier Coatings for Plastic Packaging to 2014 is available for £3750. Contact: Pira International, Cleeve Road, Leatherhead, KT22 7RU, UK. Tel: +44 1372 802000, Web: www.pira-international.com
Additives for Polymers
11
Strategic positioning pays off for Lanxess in 2Q 2010
G
ermany’s Lanxess reported significantly better-than-expected results in the second quarter of 2010, which it attributes to its strategic positioning in the emerging markets. The company posted sales of E1.83 billion, up 48% from E1.238 billion in 2Q 2009, primarily due to higher volumes in key customer industries and positive currency effects in the form of the weak Euro. Quarterly net profit totalled E131 million compared to E17 million a year earlier. The company more than doubled EBITDA pre exceptionals year on year to E269 million in 2Q 2010, while EBITDA margin pre exceptionals rose to 14.7% from 9.0% a year ago. Higher raw material costs were fully passed on to customers through product price increases. Europe (excluding Germany), the Middle East and Africa remained the largest sales region in 2Q 2010, with 29% of group sales. The region increased topline growth by 37% to E531 million, driven by the Performance Polymers and Performance Chemicals segments. Sales in Germany rose 27% to E325 million (18% of total). Latin America recorded the strongest year-on-year growth for the quarter, with sales more than doubling to E245 million. Sales grew by 68% to E313 million in North America and by 36% to E414 million in the Asia-Pacific. In the Performance Chemicals segment, 2Q sales rose 40% year on year to E537 million, with all seven business units showing volume improvements. EBITDA pre exceptionals rose 91% to E84 million. Due to the positive business development, Lanxess says it will partly put on hold its ‘Challenge09-12’ package of global measures, which were introduced to mitigate the effects of the economic crisis. However, the company will not completely abandon its flexible cost structures as tough trading conditions still exist in several of the business units and countries.
Contact: Lanxess, Leverkusen, Germany. Tel: +49 214 30 33333, Web: www.lanxess.com
10
Additives for Polymers
Chemtura reports 2Q 2010 results and progress with bankruptcy exit plan
C
hemtura Corp reported sales of US$767 million for the second quarter of 2010, up 22% from $629 million in 2Q 2009. The company posted an operating profit of $122 million for the quarter, but a net loss from continuing operations on a GAAP basis of $41 million. This compares to an operating loss of $10 million and a net loss of $56 million for the same period the previous year. The company’s Industrial Performance Products division, which includes its antioxidant/UV stabilizer polymer additives activities, reported 2Q sales up 29% to $313 million compared to 2Q 2009, driven mainly by higher selling prices and increased sales volumes. Volumes improved primarily as a result of increased customer demand across all business segments driven by improved economic conditions, and strong growth in the Asia-Pacific region. Operating profit was up by $17 million to $38 million, due to increased sales volume, lower manufacturing costs and higher selling prices, partially offset by higher raw material and energy costs. Chemtura’s Industrial Engineered Products business, which includes its flame retardants activities, reported a 44% increase in sales versus 2Q 2009, to $187 million. Demand for some products sold to electronic applications has continued to demonstrate year-over-year improvement with some recovery evident in building and construction, and consumer durable polymer applications, the company says. Operating profit rose by $10 million to $7 million but was impacted by charges resulting from restructuring initiatives in this segment. As part of the process to emerge from Chapter 11 protection, Chemtura filed a plan of reorganization and a related disclosure statement with the bankruptcy court on 17 June (ADPO, August 2010), with subsequent revisions on 9 and 20 July. The court approved the adequacy of the disclosure statement on 5 August but the company is still awaiting confirmation of the reorganization plan. Meanwhile, on 27 August Chemtura completed a private placement offering of $455 million in unsecured senior notes due 2018, and on the same date entered into a previously announced $295 million senior term loan facility. Both measures are intended to fund its Chapter 11 exit financing package once the reorganization plan is confirmed; until that time the net proceeds of the notes offering and the loan have been placed into segregated escrow accounts.
October 2010
MARKETS
Contact: Chemtura Corp, Middlebury, CT, USA. Tel: +1 203 573 2000, Web: www.chemtura.com
MARKETS Annual growth of 3.9% to 2014 forecast for functional additives in plastic packaging
A
new study by Pira International predicts that the global market for functional additives and barrier coatings for plastic packaging will grow at a compound annual growth rate (CAGR) of 4.3% in the period 2009 to 2014. This values the combined sector at US$752 million (c. E540 million) in 2014 compared to $609 million in 2009. Within that, demand for functional plastic additives for packaging is expected to grow at the slightly more modest rate of 3.9%/year on average to around $325 million in 2014. The Future of Functional Additives and Barrier Coatings for Plastic Packaging to 2014 draws on extensive primary research and desk research, including interviews with key players along the supply chain, information from the Pira International database, company websites, market reports and company reports. The report analyses the market as a whole and by type of coating and additive, end-use sector and geographic region. Key market drivers, trends and technological developments are also covered in detail. The report finds that the largest end-use segments for functional additives and barrier coatings in packaging are electronics and electrical goods, and the snack foods market. In value terms, snack foods accounted for 10.5% of the market for additives and barrier coatings for plastic packaging in 2009. Dried foods accounted for a further 10.2%, confectionery 9.0%, baked goods 8.1% and beverages 7.8%. Key drivers for the forecast growth, which is predicted to outstrip growth in the overall packaging market, are
October 2010
increasing consumer demand for convenience and product safety. ‘There is a rapidly increasing demand for packaging materials that give even greater protection to their contents’, the report says. Among the additive types used in packaging applications, Pira expects antifog and antimicrobial additives to have the best development prospects. The report considers a range of factors that influence current and future demand. Busier lifestyles among consumers and the increasing number of single-person and single-parent households will drive demand for smaller packs, ready meals and frozen food. In turn this will spur demand for barrier coatings and functional additives. For example, there is growing demand for smaller PET bottles, which have a higher surface area per unit volume and therefore require better protection than larger bottles, says Pira. The growing footprint of large retail chains in developing markets is also expected to stimulate the sales of packaged food. Mounting pressure to lessen the environmental impact of packaging is likely to result in a reduction in packaging weight by switching to thinner materials, which will in turn drive demand for functional additives; the use of barrier coatings is also expected to increase thanks to its relative ease of recycling as opposed to older technologies such as multilayer bottles, Pira finds. On the negative side, the global recession has resulted in a fall in sales for a number of products requiring more sophisticated packaging, such as cosmetics, snack foods, confectionery and ready meals, and this in turn has had a detrimental impact on the demand for functional additives and barrier coatings. In terms of geographical area, growth rates for these products in Western Europe and North American are slower than the global average. The highest growth rates are in China and India – more than 10%. In 2009, Asia-Pacific took the largest share of the additives and barrier market (42%), followed by North America (24.5%), Western Europe (19.9%), Central and Eastern Europe (5.4%), South America (3.9%) and the rest of the world (4.3%). The Future of Functional Additives and Barrier Coatings for Plastic Packaging to 2014 is available for £3750. Contact: Pira International, Cleeve Road, Leatherhead, KT22 7RU, UK. Tel: +44 1372 802000, Web: www.pira-international.com
Additives for Polymers
11