Company News
May 1, 2024
Urethane Highlights from BASF Investors Call
BASF SE (BASFY) Q1 2024 Earnings Call Transcript
Apr. 25, 2024 5:48 AM ETBASF SE (BASFY) Stock, BFFAF Stock
BASF SE (OTCQX:BASFY) Q1 2024 Earnings Conference Call April 25, 2024 1:30 AM ET
Company Participants
Stefanie Wettberg – SVP, IR
Martin Brudermuller – Chairman & CEO
Dirk Elvermann – CFO & Chief Digital Officer
Martin Brudermuller
Good morning, ladies and gentlemen. Dirk Elvermann and I welcome you to our analyst conference call. Today, we will provide you with details regarding our business development in the first quarter of 2024.
Let’s start with the development of chemical production by region. Based on the currently available data, global chemical production grew by 5.4% in Q1 2024 compared with the prior year quarter on account of a strong growth in China. As in previous quarters, the growth in China was driven by recovering domestic demand and exports. However, this volume growth in China was still associated with low sales prices and is influenced by positive base effects.
In North America, our chemical production was essentially flat. While in the European Union, production increased slightly compared with the weak prior year quarter. And in Asia, excluding China, production decreased slightly. To sum up, the volume recovery continued, but slowly this trend is also seen in a sequential comparison as volumes increased slightly in Q1 2024 compared with Q4 2023. Still, we cannot yet confirm a fundamental turnaround in industry dynamics. For this, we will need to see the current positive trend continuing in the coming quarters.
We now move on to BASF’s performance in the first quarter of 2024 compared with the previous — the prior year quarter. Overall, BASF Group sales were 12% lower at EUR 17.6 billion. This was mainly due to lower sales prices, which declined across almost all segments. Prices predominantly decreased on account of lower raw material prices.
In Agricultural Solutions, we were able to slightly increase prices. Currency headwinds dampened sales in all divisions. Volumes of BASF Group increased by 0.5%. Excluding pressures and base metals, volume increased by 2.1% compared with the prior year quarter.
In terms of earnings development, we had a solid start to the year. EBIT before — EBITDA before special items amounted to EUR 2.7 billion. This is slightly below the figure of the prior year quarter and slightly ahead of analyst consensus. Higher earnings in the Nutrition & Care, Materials, Industrial Solutions and Chemicals segments more than compensated for the decline in other Agricultural Solutions and Service Technologies.
Let’s take a closer look at the volume development by segment. Volumes in the Chemicals, Materials, Nutrition & Care and Industrial Solutions segments increased, while Agricultural Solutions and Service Technology recorded a decline. Higher volumes in our upstream businesses led to improved utilization rates at our major plans and positively impacted profitability.
Excluding precious and base metals, the Surface Technologies segment recorded a volume decline of only 0.9% on account of the — distribution. Volumes in the Coatings division increased, and Agricultural Solutions volume declined mainly to lower sales of herbicides and fungicides compared with the record prior year quarter.
Tony Jones
All the best, Martin. Only a few months ago, Martin, you talked about the need to review your production network, particularly in Germany, given high cost and low growth. How are you thinking about this now with the strongest start to the year? And a quick one for Q2. Maybe you could give a little bit of color about how you see the divisional outlook as we go into the second quarter.
Martin Brudermuller
I’ll take the first one, Dirk, you take the second one. I mean overall, let me say, I think our decisions that we have taken already to shut down plants and to trim the Fubon to basically competitiveness framework and also to the demand in Europe, I think it was all right decisions. But there will be more to come because I think we will have a fundamental topic in Europe because base chemicals will be for good because of structurally higher energy costs, less competitive. So we have to trim it more to the European demand. In our case, in BASF, we will trim it more to our own internal consumption and sell less to the market because you have also to take into account that the base candidates are the CO2-intensive products. That means we produce them, we sell them to the people, and then we have to reduce with high cost for CO2. That doesn’t make sense anymore. That’s why we will really use that to fuel basically our chains with the raw materials. And there’s a little bit more to come, and this is what the new Board will do when they talk about the target picture of [indiscernible], which is basically revised and renewed, I have to say, with the current framework. So I would expect that, particularly in the upstream area, the European chemical industry will be weaker in software and this lower participation in global share than it has been in the past. So that will be our work, and there’s still a little bit to be done, but I think we are very happy with the first step.
Dirk Elvermann
Yes, Tony, and just speaking — talking a little bit about the divisional outlook going forward. So starting with Chemicals and Materials, as I said already that the first quarter was okay, was good. And we have also benefited here from the one or the other special effect. Rest of World already mentioned, one of the other turnaround for outage of the competitor, which we benefited from.
Now second quarter of fundamentals, I would say, more on this unchanged, but now also we will have some turnaround. So I’d rather see that flat. Then for Industrial Solutions, I think full year, we are forecasting here a considerable increase, have nice a trend in both businesses is a volume to a large extent right now like dispersions and for instance, benefiting from that. So positive trend going forward.
Surface Technologies comprising of Catalysts, the Batteries, but also the Coatings business here for the entire segment, the site was on prior year level, depends also a little bit on development of the precious metals prices, which are, again, at a very low level, as we appreciate.
Nutrition & Care, we see a positive trend also going forward with the measures that we have taken now gaining traction. And Agricultural Solutions, we said early, after a record year last year, this will be lower volumes, while certainly, price is also getting more under pressure. But as I said, we have a more favorable mix now with higher portion of seats in our sales. So I’d rather say slight decrease and nothing dramatic happening there. So that would be my short summary of the outlook.
Laurent Favre
Yes. I guess, comments to not Christine and the others from and it’s certainly been a fun ride. My first question to you, Martin, is regarding what you — I guess what you told Jaideep. You said that there’s a clear path forward for BASF. And I guess for years, the path has been to go more downstream, and there was a lot of M&A, and I guess that was before 2018. And when we look back to 2018 and we think about your time as CEO, obviously, there’s been a lot of mess to deal with decarbonization, COVID, et cetera, and the investment in China. My question to you is, what is that clear path going forward in terms of upstream versus downstream because it’s certainly not clear to me.
And the second question for Dirk as you’ve gone through all the — all the business lines. On the other line itself, I understand there was a higher provision for the LTIP mark-to-market in Q1. Is there also a provision for higher bonuses that we should assume will be sent back to the divisions later this year?
Martin Brudermuller
Laurent, first of all, let me say, I will not communicate the strategy of the new Board team. That will be happening in a couple of months when Marcus and his team will tell you how they it, basically, what they have on their minds for the next years. I mean it will be a kind of an evolutionary thing. This is very clear. That is, I think, what was always BASF. There’s also some considerations they have, which differ from what I had. I mean I can only say when I started 2018, I had hoped for different 6 years than we actually had that we handle from one crisis to the other was really not what I had in mind, also not presenting the numbers in 2023 as they are. I hope we have a better result here, but life is as it is.
I think what is important that my team, which is very much also, to a large extent, Markus’ team, we have been working on trimming the structures of BASF. And I think this is the basis also for going forward that we really have been looking how we get closer to the customers, how we get more efficient, how do we get cost out, how we differentiate between the businesses. And I think this is my pride, I have to say, that we got along with all these targets despite of the crisis. So we have not made compromises on that, and that includes also the decisions to close down plan. So I think that’s a great basis, but have a little bit more excitement for what is coming then as the new strategy update for Marcus and the team.
Dirk Elvermann
Laurent, your question to others, you seized right. So provisions in — due to bonus accruals, due to — or to take them results proportional, but there’s also the longer-term elements in it, the LTI part. And then there are some things like the captive insurance payments. There was one that is booked here in others. And then it’s typically also to a minor extent, some consolidation effects. So that will be the 4 buckets that you’ll find another.
April 30, 2024
3PL History
Over the past decade, C.H. Robinson lost its moat to innovation and competition
Can it evolve quickly enough to satisfy Wall Street?
Craig Fuller, CEO at FreightWaves
· Monday, April 29, 2024
C.H. Robinson (Nasdaq: CHRW), the largest trucking freight brokerage, is in a challenging spot that isn’t strictly due to the Great Freight Recession. Its stock is trading near the lows of the COVID lockdown (closing price on April 26 was $70.22; the COVID low was $63.91), with investors asking tough questions about the company’s long-term prospects.
For three and a half decades, C.H. Robinson’s position was uncontested. It was in an enviable position — it had information and access to fleets that no one else did. After all, with the largest number of offices around the country and the largest network of carriers, almost no one could compete with Robinson’s pulse on the market or connection to fleets.
Early on, this information and trading arbitrage became C.H. Robinson’s unfair advantage.
However, other freight brokers emerged, and the share of freight that brokers handled grew faster than C.H. Robinson’s business.
Less than a quarter-century ago — in 2000 — freight brokerages handled only 6% of all trucking freight. Today, FreightWaves estimates that 25%-30% of freight is handled by 3PLs; others have suggested that the figure is more than 50%. Regardless, it’s a huge number.
Brokerages gained market share by taking freight from the largest asset truckload carriers, playing the role previously reserved for companies with trucks.
Shippers used to be reluctant to give freight to companies that didn’t own their own trucks. Still, they eventually realized that freight brokerages provided unparalleled flexibility and could offer rates that shifted as the market did (freight costs are massively volatile).
Because brokerages were not constrained by fleet size, they could handle surges much easier than asset-based carriers. In that regard, a brokerage can provide a superior product compared to a single-source truckload provider.
Those circumstances have caused large over-the-road truckload providers to struggle for years. It is not just freight brokerages taking share; intermodal (railroads) are also eating their lunch.
A few companies like J.B. Hunt, Werner, and most recently, Covenant, saw these changes coming. They largely moved away from their dependence on the for-hire truckload market.
Others failed to pivot fast enough — Celadon, CFI, U.S. Xpress, Interstate, etc. — and each paid dearly.
In addition, shippers benefited from the fact that brokerages were faster than the fleets about investing in technology and customer success initiatives.
From 2000 to 2015, the industry saw the scale of startup or small brokerages explode (Brokerage 2.0): TQL, Echo, Coyote, Command, Access America, Nolan, GlobalTranz and many others grew exponentially.
This caught the attention of private equity (PE) firms, corporations, and even UPS — they all bought into the belief that the freight brokerage market was ripe for consolidation.
The Brokerage 2.0 players sold out, and middle management at those firms left and started their own versions of what we’ll call Brokerage 3.0.
Meanwhile, technologies emerged that eroded Robinson’s information and fleet access advantage.
Emerging firms like Arrive, Molo and Steam popped up, and hundreds of others were created, requiring little more than a computer, an MC, and a load board account. These firms grew very quickly — understanding that the secret to freight brokerage was recruiting new brokers and creating a dynamic sales culture — something that “stuffy” corporates, PE and UPS would never understand.
The new firms cleaned the clocks of the incumbents.
PE firms and strategic acquirers soon learned that there was little differentiation between the various freight brokerages, and it was hard to retain talent unless the management teams stayed intact (which is hard to do after they’ve sold out).
Then, the most damning part of the story took place: Silicon Valley discovered freight brokerage. Startups like Convoy and Uber Freight were funded — and all focused on blitzscaling. Even Amazon joined the party, leveraging its vast resources and huge freight spend to take an additional share.
In the U.S., Amazon moves more freight through its network than FedEx.
Early on, these startups tried to achieve critical mass, offering heavily discounted pricing to “buy share.”
And they did. The digital natives grew exponentially without concern for short-term profits. However, many of those same firms have found profit elusive or worse.
At the same time, tech vendors made it easier for new entrants to join the industry and existing players to scale quickly.
DAT Rateview, Truckstop Rate Insights, SONAR and FreightWaves removed Robinson’s information advantage — now, everyone understood what was happening in the market in near real time.
Public and private load boards (DAT, Truckstop, Loadboard123), digital matching apps (J.B. Hunt 360, Loadsmart, Emerge), Trucker Tools, and others took away Robinson’s capacity access advantages. At the same time, systems like Mercury Gate, Ascend TMS, Macropoint, P44, FourKites and Transflo destroyed Robinson’s advantages in system infrastructure that enabled the brokerage to scale so quickly.
Perhaps the biggest blow to C.H. Robinson’s business model is the emergence of payment networks like TriumphPay that make it seamless for brokerages to fund growth without needing large balance sheets.
Now, anyone can start or grow a freight brokerage with little upfront capital and play at the same level (or even better) as C.H. Robinson.
After successfully fending off the pressures of competition for three decades, C.H. Robinson finally gave in.
Bob Biesterfeld, the former CEO of C.H. Robinson, declared in 2019 that the company would protect its market share by investing $1 billion in new technology.
But it was too late. Robinson had been losing market share, but this was hard to see because of the growth of the underlying market. As long as the freight brokerage market grew, few would realize that C.H. Robinson’s business was under real stress.
Then, the freight market exploded during COVID. Robinson made a fortune during the peak COVID cycle, handily beating analyst estimates like everyone in the space. However, that peak cycle turned, followed by the Great Freight Recession — one of the biggest and most painful downturns in freight market history.
Although Robinson replaced its CEO, the new CEO can do little to fend off the inevitable decline of its core business.
In recent months, FreightWaves has received reports of many veteran brokers leaving the firm, something that was unfathomable just a few years ago. Sources told FreightWaves that the departures were caused by compensation restructuring initiatives and a change in the company’s operating culture.
Margins are under pressure from the Great Freight Recession, which is now in its third year, and the cutthroat competition of thousands of freight brokerages all bidding on the same loads.
Sources have told FreightWaves that Robinson’s new management wants to change the company’s cost structure and has pursued a series of changes to its compensation structures to change the unit economics of the business. These changes have been controversial and unpopular; some veteran reps with decades of tenure have left Robinson to protest the company’s new operating culture.
However, the company must reduce operating expenses to offset the impact of declining brokerage margins.
There are few good short-term answers for C.H. Robinson.
Competition is only going to increase. Robinson’s one-time advantages are largely gone, killed by innovation and direct competition. Its leadership has little choice but to address compensation packages representing the largest operating cost at freight brokerages. But, as noted above, as those changes occur, the company will continue to lose some of its most successful sales and carrier reps. Shippers are likely to leave as a result, as often, the personal relationship with the sales and customer service teams is what keeps the shipper from moving to a competing broker.
Worse still, as a public company, all of Robinson’s challenges are visible to everyone, including competitors, employees, and customers.
A huge business model reset with some long-term thinking is required, but that may be difficult for a publicly traded company to satisfy investor expectations every quarter.
April 30, 2024
Epoxy Highlights from Olin Investors Call
Olin Corporation (OLN) Q1 2024 Earnings Call Transcript
Apr. 26, 2024 1:25 PM ETOlin Corporation (OLN) Stock
Q1: 2024-04-25 Earnings Summary
EPS of $0.45 beats by $0.09 | Revenue of $1.64B (-11.33% Y/Y) misses by $12.71M
Olin Corporation (NYSE:OLN) Q1 2024 Earnings Conference Call April 26, 2024 9:00 AM ET
Company Participants
Steve Keenan – Director, Investor Relations
Ken Lane – Chief Executive Officer
Todd Slater – Chief Financial Officer
Damian Gumpel – Vice President, Corporate Strategy
Ken Lane
Thank you, Steve and good morning everyone. Let me start by saying I am delighted to be part of Team Olin. Olin has a long and rich history with leading positions across this portfolio and I am looking forward to leading the company as we define the next phase of value creation for our shareholders and employees.
Today, Olin is in great shape with an investment-grade balance sheet and a strong team. This company has incredible potential and I look forward together with our 7,000 Olin team members to start building upon this foundation and writing the next chapter in Olin’s success story. I do want to thank Scott Sutton for his leadership of the company, which resulted in a step change of record results. Scott has been very gracious with his time and support during our transition. I am a firm believer in our operating model and I am absolutely committed to continuing Olin’s value-focused commercial approach. The entire Olin team embraces the winning model and that support runs deep from senior leadership to frontline manufacturing.
Now, I want to talk about my near-term priorities. First and foremost is always operating safely. Keeping our people and our communities safe, while running our assets efficiently and reliably. It is not a coincidence that the safest operators are the most reliable. We are focused on being a leader with respect to our safety performance.
Next, Olin is a coiled spring. And as our market demand recovers and customers seek to pull more volume, we will be ready to capture that significant value opportunity. I’ll provide whatever support is needed to defend the gains we have achieved and continue our value generation as the industry leader that we are. Also, it’s clear to me that investors appreciate Olin’s consistently strong cash flow and share buybacks across the cycle. Delivering on our commitments is an imperative. We will continue our disciplined capital allocation strategy and will be a steady buyer of our shares, focused on delivering above average shareholder returns. Finally, I am committed to providing Olin stakeholders with strategic transparency and a long-term roadmap for growth, that we will share during a Capital Markets Day around year end. More will be communicated on that in the near future.
Now, let’s take a quick look at our chlor alkali business and turn to Slide 5. Olin took decisive actions during the fourth quarter to curb price erosion across our system. Early in the first quarter, our value accelerator initiatives continue to tighten Olin supply, successfully advancing the inflection point and effectively stopping the value drop. During the first quarter, we saw improved chlorine volume being pulled by Olin customers at our value level across several key end uses, including agriculture, urethanes, titanium dioxide and water treatment. As we look beyond the first quarter, we are seeing some seasonal demand increases for chlorine and caustic soda. In the United States, planned and unplanned outages and low supplier inventories have kept caustic availability tighter than expected. Trade publications confirm that domestic caustic is climbing up from a cycle bottom.
Now, let’s turn to our Epoxy business on Slide 6. During the first quarter, our Epoxy business continued to realize the benefits of our 2023 restructuring actions. Our streamlined asset base will support the growth of our higher margin epoxy systems demand while also reducing Olin’s downside commodity exposure across the cycle. Our recently announced U.S. anti-dumping initiative seeks to level the playing field. The first quarter marks the beginning of the recovery for epoxy and the start of a gradual climb out of a very deep trough. As that building momentum continues into the second quarter, we will realize continued benefits from our restructuring and stronger focus on higher margin formulated systems.
Hassan Ahmed
Understood. Understood. And as a follow-up, you touched on the improvement sequentially within the Epoxy business. How should we think about the split between, call it, further organic improvement ove0r there? And maybe you could touch a bit on some of these sort of trade cases that you guys as well as the industry has brought about on the anti-dumping side of things?
Ken Lane
Yes. So we are seeing the impact from the restructuring last year. The team did a great job last year rightsizing the footprint. We have got the asset footprint that we think is going to support the strategy around growing the higher margin business today. But we are seeing an influx over the last year or so of products that is being dumped into the United States. First, I’ll say, we’re all for fair trade, free trade, but we are going to fight against unfair trade, and that’s what you see here. So we had the first hearings in Washington, D.C. this week. It’s early in that process, but we are going to continue to push that case. And we believe that there is a risk within the United States having only two producers of epoxy resin is a risk for the future. We have got a very critical material here that we are producing and it is under threat by unfair trade.
April 30, 2024
HP Polymers Acquired
MILWAUKEE (April 30, 2024) – Platte River Equity (“Platte River”), a Denver-based private equity firm focused on aerospace, chemical, and industrial sectors, announced its portfolio company MFG Chemical (“MFG”), a specialty custom manufacturer of complex chemistries, has acquired H.P. Polymers (“HPP” or the “Company”).
Based in Puslinch, Ontario, HPP is an independent resin and polymers manufacturer for paints and coatings. The Company’s products are used in diverse end markets across North America including metal, wood, marine, specialty, and coil applications. The combined company will continue to provide its customers with advanced technologies, technical support, and customer service.
“H.P. Polymers has a rich legacy of being a value-added partner to its customers, and we are excited to leverage the broader capabilities available through MFG to continue to grow and support our customers,” said H.P. Polymers President, Darren VanNeck.
“We are thrilled to welcome the HPP team to MFG. The acquisition of H.P. Polymers represents a tremendous opportunity for MFG to expand its capabilities and product portfolio within the paint and coatings sector,” said MFG CEO, Paul Turgeon.
“Platte River is excited about the acquisition of HPP, MFG’s third in the past two years, and we believe that HPP will enhance MFG’s product offering and accelerate the combined company’s growth,” added Tarun Kanthety, Vice President of Platte River.
Grace Matthews, Inc. (“Grace Matthews”) served as financial advisor to H.P. Polymers on the transaction.
ABOUT H.P. POLYMERS
H.P. Polymers is a North American independent manufacturer of resin and polymer solutions for customers across the paint and coatings value chain based in Puslinch, Ontario. To learn more, visit https://www.hppolymers.com/.
April 29, 2024
Recticel Results
Recticel Trading update first quarter 2024
• Net sales increase from EUR 127.7 million in 2023 to EUR 140.6 million (+10.1%) in 2024, including REX sales in 20241
• Net cash position: EUR 74.9 million (31 December 2023: EUR 161.9 million), reflecting the REX acquisition in the first quarter of 2024 and seasonal working capital investment
Jan Vergote (CEO Recticel):
“New construction is not recovering as yet in the first quarter, but renovation activities are resilient at the vanguard of the European renovation wave.
First quarter sales are up 10.1%, including a 0.8% currency effect and 8.1% attributable to the acquisition of REX Panels & Profiles, which we completed on 10 January 2024.
Organic revenue growth is 1.2% resulting from the balance of substantial raw material deflation and significantly higher sales volumes, both in our Insulation Boards and Insulated Panels divisions.
Price pressures, especially in Insulation Boards, continue to be very high, but are being offset by operational improvements.
We are currently facing price hikes for our most important chemicals and are implementing price increases in all key geographies.
We confirm our confidence in the significant increase of our full year adjusted EBITDA.”
1 REX Panels & Profiles is fully consolidated as of 10 January 2024.
https://www.recticel.com/recticel-trading-update-first-quarter-2024.html
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