note: With the second-quarter earnings season nearing
its close, HP is recapping the results from major market
players in various segments. This is the first in that
The strong gains that began 2011 for US petrochemical and specialty chemical
producers continued into the second quarter, with most firms
posting significant year-on-year profit increases as higher
sales and pricing offset rising feedstock costs.
While raw material costs such as crude oil surged
in the first half of 2011, most chemical producers were able to
successfully gain the price increases they needed to maintain
or boost margins.
In the US, major players are also still reaping
benefits from additional natural gas liquids (NGL) supply from
the various shale plays, giving them an advantage on global
Moreover, those mid-continent firms with access to
WTI crude oil regularly saved about $20/bbl in costs, relative
to competitors who relied on the more expensive Brent.
That has allowed growth to continue. Moreover, in
several places, the competitive advantage in the US has
prompted considerations for expansions, debottlenecks and even
building new capacity.
Heres a rundown of how several top companies
Dow Chemical posted a second-quarter net profit of
$1.1 billion, up 63% from $659 million a year earlier amid
higher selling prices and increased sales volumes within
performance products, plastics and chemicals.
Sales surged to just over $16 billion, up from
$13.6 billion in 2010. Revenues were particularly strong in
emerging markets, where second-quarter sales hit a Dow
quarterly record of $4.9 billion.
By segment, Dows biggest strength was in
plastics, which includes polyethylene (PE) and polypropylene
(PP). Plastics registered a sales increase of 30%, led by 20%
higher prices and 10% higher volumes.
Revenues also rose by 29% within performance
products, which includes amines, epoxy
resins, polyglycols, surfactants and fluids.
Our transformed portfolio, underpinned by our
cost-advantaged and flexible operations, is now performing at a
new level, said Dow CEO Andrew Liveris.
This is fueling higher-growth, higher-margin
performance through superior market reach, customer intimacy
and innovation, Liveris added.
Petrochemicals major LyondellBasell saw its second-quarter net
income rise to $804 million, up 21.3% from the $663 million it
made in the 2010 second quarter.
Sales were $14.04 billion, up 14.6% from $12.25
billion a year earlier.
During the second quarter, we continued to
demonstrate the earnings potential of our company as margins
increased over already strong first-quarter levels, said
LyondellBasell CEO Jim Gallogly.
On an earnings conference call, Gallogly said the
increased profits were leading to a focus on debottlenecking projects in the US.
Specifically, LyondellBasell plans to debottleneck
both its Channelview and La Porte crackers in Texas, as well as
several in the US Midwest region.
Those in the Midwest could receive feedstock directly from the
Marcellus Shale region, Gallogly said.
Gallogly said LyondellBasell would initially focus
on debottlenecking projects, rather than investing in
potential new crackers, because they can be completed in a
Chevron continued the positive trend, posting
second-quarter earnings from downstream operations of $564
million up 30% from the previous year.
Chevron officials cited improved margins for
refined products and increased earnings at the companys
Chevron Phillips Chemical (CPChem)
Chevrons partner in that joint venture, reported that its
second-quarter chemical earnings rose 44% year on year to $199
ConocoPhillips cited higher margins and volumes
within olefins and polyolefins.
Earlier this year, CPChem said it was conducting a
feasibility study regarding the building of a world-scale
ethane cracker in the US Gulf region.
On the specialty side, DuPont posted
a second-quarter profit of $1.23 billion, up 5.2% year on year
amid stronger sales prices and volumes as well as a positive
Second-quarter sales rose 19.1% to $10.3 billion,
led by 11% higher local prices, a 2% increase in volumes and a
3% rise in currency benefits.
Like Dow, sales were particularly strong in
emerging markets, rising 29% in the quarter.
DuPont CEO Ellen Kuhlman said her company was
increasing its earnings outlook for 2011 based on a strong
performance year-to-date and confidence in second-half business
Also in specialty, Eastman Chemical
had earnings of $211 million in the second quarter, up 43% year
on year from $148 million in the 2010 period.
Sales were $1.9 billion, up 27% from $1.5 billion a
year earlier. By segment, performance chemicals and
intermediates led the way with a 35% year-on-year increase in
Volume increases resulted from growth in
plasticiser product lines, increased demand for acetyl
chemicals and the restart of an idled olefins cracker in
Eastman also cited rising end-market demand
primarily in the packaging, transportation and durable goods
Eastman also increased its selling prices across
most segments, due in large part to rising raw material and
energy costs, the company said.
Those were partly mitigated by Eastmans
ability to crack low-cost propane into propylene, company
All of Eastmans specialty segments reported
rising second-quarter sales.
Stay tuned to the HPInformer blog over the next week for
similar earnings recaps of the refining and construction segments.