(Editors note: With the
first-quarter earnings season nearing its close, HP is
recapping the results from major market players in
various segments. This is the first in that series.)
US petrochemical and specialty chemical
producers enjoyed strong results to start 2011, with most firms
posting significant year-on-year profit gains as higher sales
and pricing offset rising feedstock costs.
While demand did recover in 2010, chemical companies saw
their profit gains challenged by higher feedstocks, particularly from crude
oil and olefins such as ethylene and propylene.
But thus far in 2011, North American producers have begun to
reap the benefits of additional natural
gas liquids (NGL) supply from the various shale plays.
That has allowed growth to continue. Moreover, in several
cases, it has prompted consideration for expansions or even building new US
Heres a rundown of how several top firms
Dow Chemical posted a first-quarter net profit of
$721mn, up 30.6% year on year amid stronger volumes and a 12%
jump in overall prices.
That jump in prices more than offset a $700mn increase in
purchased feedstock and energy costs, the
US-based producer said.
Sales increased 9.8% to $14.7 billion as volumes jumped 8%
year on year, driven by gains across all geographic areas and
Volumes were particularly strong in Dows health and
agricultural sciences business, where they increased 14%, as
well as in electronic and specialty materials, which grew by
Our focus on execution was clear as we drove
significant sales increases across all geographies and all
operating segments through rigorous price and volume
discipline, said CEO Andrew Liveris.
Dow has now achieved eight consecutive quarters of margin
growth, he added.
Looking forward, Dow said demand would continue to be strong
in emerging regions, as a rising middle class and ongoing
infrastructure investments are likely to offset inflationary
However, the US is expected to be strong as well, with the
company announcing plans to build new ethylene and propylene capacity
in coming years.
Likewise, petrochemicals major
LyondellBasell saw its first-quarter net
income surge to $660mn, up from $8mn in the same period of 2010
as sales increased and margins expanded.
Sales were $12.3bn, up by 26% year on year, while earnings
before interest, tax, depreciation and amortization (EBITDA)
more than doubled.
During the first quarter, we again demonstrated the
earnings potential of our company as margins increased in newly
all businesses compared to the fourth quarter 2010, despite
significant raw material pricing pressures, said
LyondellBasell CEO Jim Gallogly.
Like Dow, Lyondell said it was expanding its ethylene output and was
considering a new US cracker.
Chevron continued the positive trend, posting earnings
from downstream operations of $442mn up from $82mn in
the same quarter a year earlier.
The company cited improved margins for refined products and
higher profits from its Chevron Phillips Chemical
(CPChem) joint venture.
ConocoPhillips, Chevrons partner in
that joint venture, reported that its first-quarter chemical
earnings rose 75% year on year to $193mn.
During the quarter, CPChem said it was conducting a feasibility study regarding
the building of a world-scale ethane cracker in the US Gulf
On the specialty side, DuPont posted a
first-quarter profit of $1.43 billion, up by 27% year on year
on higher sales volumes and selling prices.
Consolidated net sales grew by 18% to $10 billion, led by
30% growth from sales in developing markets.
Volumes were up by 9% and local prices by 8%, the US
chemical major reported.
DuPont said volumes were particularly strong within its
safety and precaution, agriculture and nutrition and
electronics and communications segments.
Also in specialty, Eastman Chemical posted a
first-quarter profit of $220mn, more than doubling the $101mn
it made in the 2010 first quarter.
Sales were $1.75 billion, up 28% year on year.
We grew volume year over year in very business
segments and in every region of the world, said CEO Jim
The positive first-quarter report followed the
companys $615mn divestment of its US polyethylene
terephthalate (PET) business to DAK Americas, Eastman
Stay tuned to the HPInformer blog over the next
week for similar earnings recaps of the refining and construction segments.