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Everchem Updates
VOLUME XXI
September 14, 2023
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October 24, 2019
BASF Group third-quarter EBIT before special items declines 24% from prior-year quarter; outlook for 2019 confirmed
- Sales of €15.2 billion (minus 2%); sales volumes match level in prior-year quarter
- EBIT before special items declines to €1.1 billion, primarily due to significantly lower earnings contributions from Chemicals and Materials
- Surface Technologies, Agricultural Solutions, Industrial Solutions and Nutrition & Care segments post considerable increase in earnings
- Outlook for 2019 confirmed: EBIT before special items expected to be up to 30% below prior-year level
BASF Group sales in the third quarter of 2019 declined slightly year on year and amounted to €15.2 billion. This was mainly attributable to lower prices in the Materials and Chemicals segments. The uncertainties in the market and cautious ordering by customers also played a role. Demand from key customer sectors did not recover. Nevertheless, BASF was able to keep its sales volumes at the level of the prior-year quarter thanks mainly to higher volumes in the Agricultural Solutions and Surface Technologies segments.
Income from operations (EBIT) before special items was €1.1 billion, down by 24% compared with the level of the third quarter of 2018. This was primarily due to significantly lower contributions from the Materials and Chemicals segments. As expected, isocyanate prices declined considerably. In addition, there were scheduled turnarounds at the steam crackers and falling margins for cracker products. These factors had a significant negative impact on earnings in the two segments. “In our downstream divisions, we were successful despite the difficult market environment and posted a considerable improvement compared with the prior-year quarter,” said Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE, at the presentation of the financial results for the third quarter of 2019. In the Industrial Solutions segment, EBIT before special items increased considerably primarily due to lower fixed costs. In the Surface Technologies segment, EBIT before special items also rose considerably in all three divisions. In the Nutrition & Care segment, EBIT before special items grew considerably as a result of significantly higher earnings in the Care Chemicals division. In the Agricultural Solutions segment, EBIT before special items increased considerably, driven mainly by higher sales. One reason for this was the good start to the season in South America.
EBITDA increased to €2.3 billion, compared with €2.2 billion in the third quarter of 2018. EBITDA before special items was down by 8% to €2.1 billion.
EBIT amounted to €1.4 billion, nearly matching the prior-year level. Special items in EBIT totaled €257 million, compared with minus €75 million in the prior-year period. A considerable disposal gain from the sale of BASF’s share of the Klybeck site in Basel, Switzerland, more than offset special charges for restructuring measures, for the integration of the businesses acquired from Bayer and for divestitures.
Net income amounted to €911 million, compared with €1.2 billion in the third quarter of 2018.
Earnings per share in the third quarter of 2019 fell to €1.00 from €1.31 in the prior-year quarter. Adjusted earnings per share were €0.86, compared to €1.51 in the prior-year quarter.
Cash flows from operating activities amounted to €2.0 billion, compared with €2.9 billion in the third quarter of 2018. Free cash flow declined to €1.1 billion as a result of lower cash flows from operating activities.
BASF proceeding rapidly and systematically with strategy implementation
The geopolitical conditions are and will remain challenging for BASF. “In particular, the trade conflict between the United States and China is weighing on our business. Moreover, there are uncertainties related to Brexit,” said Brudermüller. He added: “These events are acting as a drag on the economy – not only in export-oriented countries in Europe. The United States is also experiencing a noticeable slowdown. Growth continues in China, albeit at a slower pace. Production in the global automotive industry again declined compared with the already low level at the end of the first half of the year.”
“It is not within our power to change the unfavorable underlying conditions,” said Brudermüller. “However, we know exactly what we have to address within BASF. And we are working on this with speed and determination. We are rapidly and systematically reshaping our organization – toward greater customer focus and leaner structures.”
2019 is a transition year for BASF. Brudermüller: “We are using the time this year to implement our corporate strategy with energy, passion and speed – step by step. We are streamlining our administration, focusing the roles of services and regions, and simplifying procedures and processes. We have already made good progress in reshaping our organization.”
The implementation of the strategy BASF presented about a year ago is proceeding rapidly. Significant parts of the functional services have been embedded in the operating divisions. As of October 1, BASF completed the organizational reassignment of around 20,000 employees.
Acceleration of excellence program
“We have accelerated our excellence program and are well on our way to reaching the targeted annual EBITDA contribution of €2 billion by the end of 2021,” said Dr. Hans-Ulrich Engel, Chief Financial Officer and Vice Chairman of the Board of Executive Directors of BASF SE. “In the current year, we will achieve the first positive EBITDA contributions amounting to around €500 million,” he added. However, BASF expects the accelerated implementation to result in one-off costs of a similar magnitude. For 2020, the company expects an EBITDA contribution in the range of €1 billion to €1.3 billion. This will be offset by one-off costs estimated at €200 million to €300 million.
The largest contribution from the measures carried out under this program will be achieved in the areas of production, logistics and planning. “Moreover, we are streamlining our organization and creating leaner structures. Around 1,800 positions were reduced globally by the end of September 2019,” Engel said.
BASF Group outlook for 2019
Martin Brudermüller confirmed the 2019 outlook for the BASF Group. Accordingly, BASF still expects a slight decline in sales. For EBIT before special items, BASF expects a considerable decline of up to 30%. Return on capital employed (ROCE) for the full year 2019 is expected to decline considerably compared with 2018.
The company slightly adjusted its underlying planning assumptions for the oil price: For 2019, BASF now expects an average Brent blend oil price for the year of $65 per barrel (previously $70).
The other assumptions for the global economic environment remain unchanged (growth in gross domestic product: 2.5%; growth in industrial production: 1.5%; growth in chemical production: 1.5%; average euro/dollar exchange rate of $1.15 per euro).
https://www.basf.com/global/en/media/news-releases/2019/10/p-19-367.html
October 24, 2019
Dow reports third quarter 2019 results
MIDLAND, Mich.–(BUSINESS WIRE)–Dow (NYSE: DOW):
FINANCIAL HIGHLIGHTS
- GAAP EPS from continuing operations of $0.45; Operating EPS¹ of $0.91 versus pro forma results of $1.34 in the year-ago period. Operating EPS excludes significant items in the quarter, totaling $0.46 per share, primarily related to: environmental charges; integration and separation costs; and a gain associated with litigation matters.
- GAAP Net Income of $347 million; Operating EBIT¹ of $1.1 billion versus pro forma results of $1.6 billion in the year-ago period.
- Net Sales were $10.8 billion, down 15% versus pro forma results in the year-ago period, driven by lower local prices primarily due to declines in global energy prices.
- Volume declined 2% versus pro forma results in the year-ago period. Demand growth in packaging, polyurethanes and silicones applications was more than offset by lower hydrocarbon co-product sales, resulting from a lighter feedstock slate in Europe, and increased ethylene integration from the startup of new U.S. Gulf Coast assets. Excluding the Hydrocarbons & Energy business, volume rose 1%.
- Local price declined 12% versus pro forma results in the year-ago period, driven primarily by decreases in polyethylene, hydrocarbon co-products, siloxanes and isocyanates. Currency decreased sales by 1%.
- Equity losses were $44 million, compared to pro forma equity earnings of $135 million in the year-ago period. The reduction was primarily due to lower results at the Kuwait joint ventures, driven by margin compression in monoethylene glycol (MEG) and polyethylene.
- Operating EBIT was $1.1 billion, down from pro forma results of $1.6 billion in the year-ago period, reflecting margin compression and the impact from lost production in Argentina. These factors were partly offset by savings from cost synergies and stranded cost removal, as well as new capacity on the U.S. Gulf Coast. Sequentially, Operating EBIT rose $58 million and Operating EBIT Margin expanded 80 basis points (bps), driven by lower planned maintenance spending in the Industrial Solutions business and margin expansion in Packaging & Specialty Plastics.
- Completed the Materials Science Division $1.365 billion cost synergy program and removed $40 million of stranded costs in the quarter.
- Cash provided by operating activities – continuing operations was $1.8 billion, up $1.6 billion versus the year-ago period. Capital expenditures in the quarter were $472 million and free cash flow2 was $1.3 billion.
- Returned $0.6 billion to shareholders in the quarter, including $0.5 billion in dividends and $0.1 billion in share repurchases.
SUMMARY FINANCIAL RESULTS
|
|
Three Months Ended September 30 |
Three Months Ended June 30 |
|||
|
In millions, except per share amounts |
3Q19 As Reported |
3Q183 Pro Forma |
vs. SQLY [B / (W)] |
2Q19 As Reported |
vs. PQ [B / (W)] |
|
Net Sales |
$10,764 |
$12,697 |
$(1,933) |
$11,014 |
$(250) |
|
Operating EBIT¹ |
$1,117 |
$1,611 |
$(494) |
$1,059 |
$58 |
|
Operating EBIT Margin¹ |
10.4% |
12.7% |
(230) bps |
9.6% |
80 bps |
|
Operating EBITDA¹ |
$1,856 |
$2,343 |
$(487) |
$1,802 |
$54 |
|
Operating EPS¹ |
$0.91 |
$1.34 |
$(0.43) |
$0.86 |
$0.05 |
|
Cash provided by operating activities – continuing ops |
$1,790 |
$203 |
$1,587 |
$960 |
$830 |
- Op. EPS, Op. EBIT, Op. EBIT Margin and Op. EBITDA are non-GAAP measures. See page 13 for further discussion.
- Free cash flow is defined as cash flows from operating activities – continuing operations, excluding the impact of ASU 2016-15, less capital expenditures.
- Financial information for the three months ended September 30, 2018 was prepared on a pro forma basis and determined in accordance with
Article 11 of Regulation S-X.
CEO QUOTE
Jim Fitterling, chief executive officer, commented on the quarter:
“Our results this quarter demonstrated the Dow team’s focus on managing operational levers in response to a difficult business environment. We grew volume in our packaging, polyurethanes and silicones businesses, and once again successfully leveraged our industry-leading feedstock flexibility in the U.S. and Europe. Our team also took actions to improve pricing – with notable improvements in the Packaging and Specialty Plastics business toward the end of the quarter. Further, we continued to drive down our cost structure, completing the $1.365 billion cost synergy program and removing $40 million of stranded costs. Together, these factors delivered sequential earnings, margins and free cash flow improvements. Overall, our results showcased the strengths of the Dow portfolio and team.”
SEGMENT HIGHLIGHTS
Packaging & Specialty Plastics
|
|
Three Months Ended September 30 |
Three Months Ended June 30 |
|||
|
In millions, except margin percentages |
3Q19 |
3Q18 |
vs. SQLY [B / (W)] |
2Q19 |
vs. PQ [B / (W)] |
|
Net Sales |
$5,062 |
$6,157 |
$(1,095) |
$5,205 |
$(143) |
|
Operating EBIT |
$798 |
$857 |
$(59) |
$768 |
$30 |
|
Operating EBIT Margin |
15.8% |
13.9% |
190 bps |
14.8% |
100 bps |
|
Equity Earnings (Losses) |
$23 |
$83 |
$(60) |
$74 |
$(51) |
Packaging & Specialty Plastics net sales were $5.1 billion, down $1.1 billion versus pro forma results in the year-ago period. Volume declined 4% as growth in Packaging and Specialty Plastics was more than offset by a decline in Hydrocarbons & Energy. Local price declined 13%, and currency decreased net sales by 1%.
Packaging and Specialty Plastics reported a decline in net sales as volume growth was more than offset by reduced prices. Volume gains were reported in Asia Pacific and Europe, Middle East, Africa & India. Lower volume in Latin America was due to restricted monomer supply as ethylene operations in Argentina were offline through the quarter. The business reported the strongest end-market growth in industrial and consumer packaging, flexible food and specialty packaging, and health and hygiene applications.
Hydrocarbons & Energy reported a net sales decline on lower volume and price. The sales volume decline was driven primarily by: lighter feedstock usage in Europe, leading to lower co-product production volumes; increased ethylene integration (lower merchant sales) from the startup of new U.S. Gulf Coast assets; and planned turnaround activity in Europe.
Equity earnings for the segment were $23 million, down from pro forma equity earnings of $83 million in the year-ago period. The decline was primarily driven by lower earnings from the Kuwait joint ventures and increased equity losses from Sadara.
Operating EBIT was $798 million, down $59 million versus pro forma results in the year-ago period. Margin expansion, contributions from new capacity and cost synergy savings were more than offset by lower equity earnings.
In September, a judgment was entered by The Court of the Queen’s Bench in Alberta, Canada ordering Nova Chemicals to pay the Company approximately CAD$1.43 billion (equivalent to approximately USD$1.08 billion). The judgment relates to an initial ruling in June 2018 where the court found that Nova violated several contractual agreements related to ethane allocation and ethylene production under a jointly-owned ethylene asset. The judgment is subject to appeal. On October 10, 2019, Dow received the related cash payment (net of tax withholding) of USD$0.8 billion. Subsequently, the Company issued a make whole call for the full redemption of $1.25 billion of notes due in 2021, further reducing debt.
Industrial Intermediates & Infrastructure
|
|
Three Months Ended September 30 |
Three Months Ended June 30 |
|||
|
In millions, except margin percentages |
3Q19 |
3Q18 |
vs. SQLY [B / (W)] |
2Q19 |
vs. PQ [B / (W)] |
|
Net Sales |
$3,365 |
$3,913 |
$(548) |
$3,342 |
$23 |
|
Operating EBIT |
$193 |
$466 |
$(273) |
$154 |
$39 |
|
Operating EBIT Margin |
5.7% |
11.9% |
(620) bps |
4.6% |
110 bps |
|
Equity Earnings (Losses) |
$(70) |
$54 |
$(124) |
$(78) |
$8 |
Industrial Intermediates & Infrastructure net sales were $3.4 billion, down $548 million versus pro forma results in the year-ago period. Volume was flat, local price declined 13%, and currency decreased net sales by 1%.
Polyurethanes & Construction Chemicals reported a net sales decline, as modest volume growth was more than offset by price declines, led by lower components (isocyanates and polyols) prices. Local price declines were reported in all geographic regions. Volume growth was led by the U.S. & Canada on improved supply of methylene diphenyl diisocyanate (MDI), as the year-ago period was impacted by planned turnaround activity. In addition, volume growth continued in polyurethane systems, as the business marked 25 consecutive quarters of year-over-year volume growth.
Industrial Solutions reported lower net sales, primarily driven by price declines that reflected lower feedstock costs. The business reported a modest decline in volume, driven by reduced demand in energy, agricultural and automotive end-markets, which more than offset growth in catalyst applications and pharma end-markets.
Equity losses for the segment were $70 million, down from pro forma equity earnings of $54 million in the year-ago period, primarily due to margin compression in isocyanates at Sadara and MEG at the Kuwait joint ventures.
Operating EBIT was $193 million, down $273 million versus pro forma results in the year-ago period, primarily due to lower equity earnings and margin compression in isocyanates and MEG.
Performance Materials & Coatings
|
|
Three Months Ended September 30 |
Three Months Ended June 30 |
|||
|
In millions, except margin percentages |
3Q19 |
3Q18 |
vs. SQLY [B / (W)] |
2Q19 |
vs. PQ [B / (W)] |
|
Net Sales |
$2,250 |
$2,552 |
$(302) |
$2,356 |
$(106) |
|
Operating EBIT |
$200 |
$398 |
$(198) |
$214 |
$(14) |
|
Operating EBIT Margin |
8.9% |
15.6% |
(670) bps |
9.1% |
(20) bps |
|
Equity Earnings (Losses) |
$2 |
$3 |
$(1) |
$1 |
$1 |
Performance Materials & Coatings net sales were $2.3 billion, down $302 million versus pro forma results in the year-ago period. Local price declined 10%, volume declined by 1%, and currency decreased net sales by 1%.
Consumer Solutions reported a decline in net sales as volume growth in Asia Pacific and the U.S. & Canada was more than offset by local price declines in all geographic regions, led by lower siloxanes prices. The business reported year-over-year volume growth in the infrastructure end-market, as well as improved demand for siloxanes in Asia Pacific. These more than offset demand contraction in automotive and consumer electronics end-markets.
Coatings & Performance Monomers reported lower net sales on declines in local price and volume. Coatings volume declined, primarily driven by lower demand in U.S. & Canada architectural coatings and in Asia Pacific industrial coatings end-markets. Performance Monomers volume declined, primarily due to lower merchant sales of acrylates in North America.
Operating EBIT was $200 million, down $198 million versus pro forma results in the year-ago period, primarily due to margin compression in siloxanes and lower coatings and monomers demand.
OUTLOOK
“Over the past year, we have made strong progress on our operational and financial playbook for the new Dow,” said Fitterling. “We have taken prudent actions to adapt quickly to the macro environment and to preserve our financial strength. Moving forward, we will continue to leverage our feedstock flexibility; advance lower-risk, higher-return growth investments; and achieve our stranded cost removal target. We will also remain steadfast in driving improvements to our free cash flow – demonstrated by our recent debt redemption announcement, which will use the cash payment from the Nova judgment. These actions enable us to manage the current environment and place us in a strong competitive position when the industrial economy rebounds.”
https://www.businesswire.com/news/home/20191024005421/en/Dow-reports-quarter-2019-results
October 24, 2019
Dow reports third quarter 2019 results
MIDLAND, Mich.–(BUSINESS WIRE)–Dow (NYSE: DOW):
FINANCIAL HIGHLIGHTS
- GAAP EPS from continuing operations of $0.45; Operating EPS¹ of $0.91 versus pro forma results of $1.34 in the year-ago period. Operating EPS excludes significant items in the quarter, totaling $0.46 per share, primarily related to: environmental charges; integration and separation costs; and a gain associated with litigation matters.
- GAAP Net Income of $347 million; Operating EBIT¹ of $1.1 billion versus pro forma results of $1.6 billion in the year-ago period.
- Net Sales were $10.8 billion, down 15% versus pro forma results in the year-ago period, driven by lower local prices primarily due to declines in global energy prices.
- Volume declined 2% versus pro forma results in the year-ago period. Demand growth in packaging, polyurethanes and silicones applications was more than offset by lower hydrocarbon co-product sales, resulting from a lighter feedstock slate in Europe, and increased ethylene integration from the startup of new U.S. Gulf Coast assets. Excluding the Hydrocarbons & Energy business, volume rose 1%.
- Local price declined 12% versus pro forma results in the year-ago period, driven primarily by decreases in polyethylene, hydrocarbon co-products, siloxanes and isocyanates. Currency decreased sales by 1%.
- Equity losses were $44 million, compared to pro forma equity earnings of $135 million in the year-ago period. The reduction was primarily due to lower results at the Kuwait joint ventures, driven by margin compression in monoethylene glycol (MEG) and polyethylene.
- Operating EBIT was $1.1 billion, down from pro forma results of $1.6 billion in the year-ago period, reflecting margin compression and the impact from lost production in Argentina. These factors were partly offset by savings from cost synergies and stranded cost removal, as well as new capacity on the U.S. Gulf Coast. Sequentially, Operating EBIT rose $58 million and Operating EBIT Margin expanded 80 basis points (bps), driven by lower planned maintenance spending in the Industrial Solutions business and margin expansion in Packaging & Specialty Plastics.
- Completed the Materials Science Division $1.365 billion cost synergy program and removed $40 million of stranded costs in the quarter.
- Cash provided by operating activities – continuing operations was $1.8 billion, up $1.6 billion versus the year-ago period. Capital expenditures in the quarter were $472 million and free cash flow2 was $1.3 billion.
- Returned $0.6 billion to shareholders in the quarter, including $0.5 billion in dividends and $0.1 billion in share repurchases.
SUMMARY FINANCIAL RESULTS
|
|
Three Months Ended September 30 |
Three Months Ended June 30 |
|||
|
In millions, except per share amounts |
3Q19 As Reported |
3Q183 Pro Forma |
vs. SQLY [B / (W)] |
2Q19 As Reported |
vs. PQ [B / (W)] |
|
Net Sales |
$10,764 |
$12,697 |
$(1,933) |
$11,014 |
$(250) |
|
Operating EBIT¹ |
$1,117 |
$1,611 |
$(494) |
$1,059 |
$58 |
|
Operating EBIT Margin¹ |
10.4% |
12.7% |
(230) bps |
9.6% |
80 bps |
|
Operating EBITDA¹ |
$1,856 |
$2,343 |
$(487) |
$1,802 |
$54 |
|
Operating EPS¹ |
$0.91 |
$1.34 |
$(0.43) |
$0.86 |
$0.05 |
|
Cash provided by operating activities – continuing ops |
$1,790 |
$203 |
$1,587 |
$960 |
$830 |
- Op. EPS, Op. EBIT, Op. EBIT Margin and Op. EBITDA are non-GAAP measures. See page 13 for further discussion.
- Free cash flow is defined as cash flows from operating activities – continuing operations, excluding the impact of ASU 2016-15, less capital expenditures.
- Financial information for the three months ended September 30, 2018 was prepared on a pro forma basis and determined in accordance with
Article 11 of Regulation S-X.
CEO QUOTE
Jim Fitterling, chief executive officer, commented on the quarter:
“Our results this quarter demonstrated the Dow team’s focus on managing operational levers in response to a difficult business environment. We grew volume in our packaging, polyurethanes and silicones businesses, and once again successfully leveraged our industry-leading feedstock flexibility in the U.S. and Europe. Our team also took actions to improve pricing – with notable improvements in the Packaging and Specialty Plastics business toward the end of the quarter. Further, we continued to drive down our cost structure, completing the $1.365 billion cost synergy program and removing $40 million of stranded costs. Together, these factors delivered sequential earnings, margins and free cash flow improvements. Overall, our results showcased the strengths of the Dow portfolio and team.”
SEGMENT HIGHLIGHTS
Packaging & Specialty Plastics
|
|
Three Months Ended September 30 |
Three Months Ended June 30 |
|||
|
In millions, except margin percentages |
3Q19 |
3Q18 |
vs. SQLY [B / (W)] |
2Q19 |
vs. PQ [B / (W)] |
|
Net Sales |
$5,062 |
$6,157 |
$(1,095) |
$5,205 |
$(143) |
|
Operating EBIT |
$798 |
$857 |
$(59) |
$768 |
$30 |
|
Operating EBIT Margin |
15.8% |
13.9% |
190 bps |
14.8% |
100 bps |
|
Equity Earnings (Losses) |
$23 |
$83 |
$(60) |
$74 |
$(51) |
Packaging & Specialty Plastics net sales were $5.1 billion, down $1.1 billion versus pro forma results in the year-ago period. Volume declined 4% as growth in Packaging and Specialty Plastics was more than offset by a decline in Hydrocarbons & Energy. Local price declined 13%, and currency decreased net sales by 1%.
Packaging and Specialty Plastics reported a decline in net sales as volume growth was more than offset by reduced prices. Volume gains were reported in Asia Pacific and Europe, Middle East, Africa & India. Lower volume in Latin America was due to restricted monomer supply as ethylene operations in Argentina were offline through the quarter. The business reported the strongest end-market growth in industrial and consumer packaging, flexible food and specialty packaging, and health and hygiene applications.
Hydrocarbons & Energy reported a net sales decline on lower volume and price. The sales volume decline was driven primarily by: lighter feedstock usage in Europe, leading to lower co-product production volumes; increased ethylene integration (lower merchant sales) from the startup of new U.S. Gulf Coast assets; and planned turnaround activity in Europe.
Equity earnings for the segment were $23 million, down from pro forma equity earnings of $83 million in the year-ago period. The decline was primarily driven by lower earnings from the Kuwait joint ventures and increased equity losses from Sadara.
Operating EBIT was $798 million, down $59 million versus pro forma results in the year-ago period. Margin expansion, contributions from new capacity and cost synergy savings were more than offset by lower equity earnings.
In September, a judgment was entered by The Court of the Queen’s Bench in Alberta, Canada ordering Nova Chemicals to pay the Company approximately CAD$1.43 billion (equivalent to approximately USD$1.08 billion). The judgment relates to an initial ruling in June 2018 where the court found that Nova violated several contractual agreements related to ethane allocation and ethylene production under a jointly-owned ethylene asset. The judgment is subject to appeal. On October 10, 2019, Dow received the related cash payment (net of tax withholding) of USD$0.8 billion. Subsequently, the Company issued a make whole call for the full redemption of $1.25 billion of notes due in 2021, further reducing debt.
Industrial Intermediates & Infrastructure
|
|
Three Months Ended September 30 |
Three Months Ended June 30 |
|||
|
In millions, except margin percentages |
3Q19 |
3Q18 |
vs. SQLY [B / (W)] |
2Q19 |
vs. PQ [B / (W)] |
|
Net Sales |
$3,365 |
$3,913 |
$(548) |
$3,342 |
$23 |
|
Operating EBIT |
$193 |
$466 |
$(273) |
$154 |
$39 |
|
Operating EBIT Margin |
5.7% |
11.9% |
(620) bps |
4.6% |
110 bps |
|
Equity Earnings (Losses) |
$(70) |
$54 |
$(124) |
$(78) |
$8 |
Industrial Intermediates & Infrastructure net sales were $3.4 billion, down $548 million versus pro forma results in the year-ago period. Volume was flat, local price declined 13%, and currency decreased net sales by 1%.
Polyurethanes & Construction Chemicals reported a net sales decline, as modest volume growth was more than offset by price declines, led by lower components (isocyanates and polyols) prices. Local price declines were reported in all geographic regions. Volume growth was led by the U.S. & Canada on improved supply of methylene diphenyl diisocyanate (MDI), as the year-ago period was impacted by planned turnaround activity. In addition, volume growth continued in polyurethane systems, as the business marked 25 consecutive quarters of year-over-year volume growth.
Industrial Solutions reported lower net sales, primarily driven by price declines that reflected lower feedstock costs. The business reported a modest decline in volume, driven by reduced demand in energy, agricultural and automotive end-markets, which more than offset growth in catalyst applications and pharma end-markets.
Equity losses for the segment were $70 million, down from pro forma equity earnings of $54 million in the year-ago period, primarily due to margin compression in isocyanates at Sadara and MEG at the Kuwait joint ventures.
Operating EBIT was $193 million, down $273 million versus pro forma results in the year-ago period, primarily due to lower equity earnings and margin compression in isocyanates and MEG.
Performance Materials & Coatings
|
|
Three Months Ended September 30 |
Three Months Ended June 30 |
|||
|
In millions, except margin percentages |
3Q19 |
3Q18 |
vs. SQLY [B / (W)] |
2Q19 |
vs. PQ [B / (W)] |
|
Net Sales |
$2,250 |
$2,552 |
$(302) |
$2,356 |
$(106) |
|
Operating EBIT |
$200 |
$398 |
$(198) |
$214 |
$(14) |
|
Operating EBIT Margin |
8.9% |
15.6% |
(670) bps |
9.1% |
(20) bps |
|
Equity Earnings (Losses) |
$2 |
$3 |
$(1) |
$1 |
$1 |
Performance Materials & Coatings net sales were $2.3 billion, down $302 million versus pro forma results in the year-ago period. Local price declined 10%, volume declined by 1%, and currency decreased net sales by 1%.
Consumer Solutions reported a decline in net sales as volume growth in Asia Pacific and the U.S. & Canada was more than offset by local price declines in all geographic regions, led by lower siloxanes prices. The business reported year-over-year volume growth in the infrastructure end-market, as well as improved demand for siloxanes in Asia Pacific. These more than offset demand contraction in automotive and consumer electronics end-markets.
Coatings & Performance Monomers reported lower net sales on declines in local price and volume. Coatings volume declined, primarily driven by lower demand in U.S. & Canada architectural coatings and in Asia Pacific industrial coatings end-markets. Performance Monomers volume declined, primarily due to lower merchant sales of acrylates in North America.
Operating EBIT was $200 million, down $198 million versus pro forma results in the year-ago period, primarily due to margin compression in siloxanes and lower coatings and monomers demand.
OUTLOOK
“Over the past year, we have made strong progress on our operational and financial playbook for the new Dow,” said Fitterling. “We have taken prudent actions to adapt quickly to the macro environment and to preserve our financial strength. Moving forward, we will continue to leverage our feedstock flexibility; advance lower-risk, higher-return growth investments; and achieve our stranded cost removal target. We will also remain steadfast in driving improvements to our free cash flow – demonstrated by our recent debt redemption announcement, which will use the cash payment from the Nova judgment. These actions enable us to manage the current environment and place us in a strong competitive position when the industrial economy rebounds.”
https://www.businesswire.com/news/home/20191024005421/en/Dow-reports-quarter-2019-results
October 24, 2019
Stepan Reports Third Quarter Results and Nine Month Earnings
NORTHFIELD, Ill., Oct. 23, 2019 /PRNewswire/ — Stepan Company (NYSE: SCL) today reported:
Third Quarter Highlights
- Reported net income was $25.9 million, or $1.11 per diluted share versus $21.8 million, or $0.93 per diluted share, in the prior year. Adjusted net income* was $27.9 million, or $1.20 per diluted share versus $26.4 million, or $1.13 per diluted share, in the prior year.
- Surfactant operating income was $19.7 million versus $28.8 million in the prior year. This decrease was primarily attributable to an 8% decline in global sales volume. The decline in global sales volume was mostly due to the Company’s exit from its sulfonation business in Germany in 2018, lower agricultural demand due to the wet weather in the U.S. farm belt and lower demand in the U.S. commodity consumer product end markets. The current quarter was also significantly impacted by higher inventory-related costs associated with the Company’s internal Asian-U.S. supply chain and the residual impact of the equipment failure in Ecatepec, Mexico. The Company’s insurance provider has acknowledged the Ecatepec incident is a covered event and the Company is pursuing insurance recovery for damaged equipment, incremental supply chain expenses and business interruption.
- Polymer operating income was $23.3 million versus $19.3 million in the prior year. This increase was mostly attributable to higher volume and improved margins. Global Polymer sales volume increased 3% versus the prior year. Global rigid polyol volume growth of 6% more than offset lower volume in other end markets.
- Specialty Product operating income was $2.3 million versus $2.7 million in the prior year. This decrease was primarily attributable to unfavorable order timing differences within our pharmaceutical business largely offset by improved margins within our medium chain triglycerides (MCTs) product line.
- The effect of foreign currency translation negatively impacted net income by $0.4 million, or $0.02 per diluted share, versus the prior year.
- The Company increased its quarterly cash dividend in the fourth quarter of 2019 by $.025 per share, or 10%, marking the 52nd consecutive year that the Company has increased its cash dividend to stockholders.
YTD Highlights
- Reported net income was $81.1 million, or $3.48 per diluted share, versus $87.2 million, or $3.74 per diluted share, in the prior year. Adjusted net income* was $93.7 million, or $4.02 per diluted share, versus $92.2 million, or $3.95 per diluted share, in the prior year. Total Company sales volume declined 3% compared to the first nine months of 2018. Sales volume growth within the Polymer and Specialty Product segments was offset by a 4% decline in Surfactant sales volume, or a 2% decline excluding the exit from the sulfonation business in Germany.
- As disclosed in the first quarter of 2019, the Company elected to change its method of accounting for U.S. inventories from the last in, first out (LIFO) basis to the first in, first out (FIFO) basis. The Company has retrospectively applied this change to its prior year financial statement comparables and denoted impacted prior year columns “As Adjusted”. The net impact of changing from the LIFO method to the FIFO method on prior year results was $0.4 million of additional expense recognition in the third quarter and $1.3 million of additional income recognition for the first nine months. The Company will recognize $1.6 million of additional expense for full year 2018.
* Adjusted net income is a non-GAAP measure which excludes deferred compensation income/expense, cash-settled stock appreciation rights (SARs), as well as other significant and infrequent/non-recurring items. See Table II for reconciliations of non-GAAP adjusted net income and adjusted earnings per diluted share.
“Despite the challenging current environment, the Company’s quarterly net income and adjusted net income exceeded prior year, and through nine months, adjusted net income is ahead of last year’s record,” said F. Quinn Stepan, Jr., Chairman, President and Chief Executive Officer. “For the quarter, Surfactant earnings were down significantly due to lower commodity volumes in North America and the slow recovery of our business in Mexico. The Polymer business had a strong third quarter driven by global rigid polyol growth. Specialty Products income was down due to customer order patterns, but is expected to deliver significant profit growth for the year.”
Outlook
“Adjusted net income for the first nine months of 2019 is up 2% from our record in 2018, despite the Mexican equipment failure and the decrease in commodity surfactant volumes. We believe our continued focus on end market diversification, Tier 2 and Tier 3 customers, as well as our cost-out activities should improve future Surfactant margins. We remain optimistic the Polymer business will deliver full year volume growth and incremental margin improvement versus 2018 given our strong rigid polyol growth in the first nine months. We believe full year Specialty Product results will improve versus 2018. Overall, despite the current year challenges, we have an opportunity to deliver another year of adjusted net income growth,” said F. Quinn Stepan, Jr., Chairman, President and Chief Executive Officer.
https://stepan.gcs-web.com/news-releases/news-release-details/stepan-reports-third-quarter-results-and-nine-month-earnings
October 24, 2019
Stepan Reports Third Quarter Results and Nine Month Earnings
NORTHFIELD, Ill., Oct. 23, 2019 /PRNewswire/ — Stepan Company (NYSE: SCL) today reported:
Third Quarter Highlights
- Reported net income was $25.9 million, or $1.11 per diluted share versus $21.8 million, or $0.93 per diluted share, in the prior year. Adjusted net income* was $27.9 million, or $1.20 per diluted share versus $26.4 million, or $1.13 per diluted share, in the prior year.
- Surfactant operating income was $19.7 million versus $28.8 million in the prior year. This decrease was primarily attributable to an 8% decline in global sales volume. The decline in global sales volume was mostly due to the Company’s exit from its sulfonation business in Germany in 2018, lower agricultural demand due to the wet weather in the U.S. farm belt and lower demand in the U.S. commodity consumer product end markets. The current quarter was also significantly impacted by higher inventory-related costs associated with the Company’s internal Asian-U.S. supply chain and the residual impact of the equipment failure in Ecatepec, Mexico. The Company’s insurance provider has acknowledged the Ecatepec incident is a covered event and the Company is pursuing insurance recovery for damaged equipment, incremental supply chain expenses and business interruption.
- Polymer operating income was $23.3 million versus $19.3 million in the prior year. This increase was mostly attributable to higher volume and improved margins. Global Polymer sales volume increased 3% versus the prior year. Global rigid polyol volume growth of 6% more than offset lower volume in other end markets.
- Specialty Product operating income was $2.3 million versus $2.7 million in the prior year. This decrease was primarily attributable to unfavorable order timing differences within our pharmaceutical business largely offset by improved margins within our medium chain triglycerides (MCTs) product line.
- The effect of foreign currency translation negatively impacted net income by $0.4 million, or $0.02 per diluted share, versus the prior year.
- The Company increased its quarterly cash dividend in the fourth quarter of 2019 by $.025 per share, or 10%, marking the 52nd consecutive year that the Company has increased its cash dividend to stockholders.
YTD Highlights
- Reported net income was $81.1 million, or $3.48 per diluted share, versus $87.2 million, or $3.74 per diluted share, in the prior year. Adjusted net income* was $93.7 million, or $4.02 per diluted share, versus $92.2 million, or $3.95 per diluted share, in the prior year. Total Company sales volume declined 3% compared to the first nine months of 2018. Sales volume growth within the Polymer and Specialty Product segments was offset by a 4% decline in Surfactant sales volume, or a 2% decline excluding the exit from the sulfonation business in Germany.
- As disclosed in the first quarter of 2019, the Company elected to change its method of accounting for U.S. inventories from the last in, first out (LIFO) basis to the first in, first out (FIFO) basis. The Company has retrospectively applied this change to its prior year financial statement comparables and denoted impacted prior year columns “As Adjusted”. The net impact of changing from the LIFO method to the FIFO method on prior year results was $0.4 million of additional expense recognition in the third quarter and $1.3 million of additional income recognition for the first nine months. The Company will recognize $1.6 million of additional expense for full year 2018.
* Adjusted net income is a non-GAAP measure which excludes deferred compensation income/expense, cash-settled stock appreciation rights (SARs), as well as other significant and infrequent/non-recurring items. See Table II for reconciliations of non-GAAP adjusted net income and adjusted earnings per diluted share.
“Despite the challenging current environment, the Company’s quarterly net income and adjusted net income exceeded prior year, and through nine months, adjusted net income is ahead of last year’s record,” said F. Quinn Stepan, Jr., Chairman, President and Chief Executive Officer. “For the quarter, Surfactant earnings were down significantly due to lower commodity volumes in North America and the slow recovery of our business in Mexico. The Polymer business had a strong third quarter driven by global rigid polyol growth. Specialty Products income was down due to customer order patterns, but is expected to deliver significant profit growth for the year.”
Outlook
“Adjusted net income for the first nine months of 2019 is up 2% from our record in 2018, despite the Mexican equipment failure and the decrease in commodity surfactant volumes. We believe our continued focus on end market diversification, Tier 2 and Tier 3 customers, as well as our cost-out activities should improve future Surfactant margins. We remain optimistic the Polymer business will deliver full year volume growth and incremental margin improvement versus 2018 given our strong rigid polyol growth in the first nine months. We believe full year Specialty Product results will improve versus 2018. Overall, despite the current year challenges, we have an opportunity to deliver another year of adjusted net income growth,” said F. Quinn Stepan, Jr., Chairman, President and Chief Executive Officer.
https://stepan.gcs-web.com/news-releases/news-release-details/stepan-reports-third-quarter-results-and-nine-month-earnings
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