Chemical earnings rise again in first quarter

2
Β. St. John, director of the Plant Sci- ences Institute of the Department of Agriculture's Agricultural Research Service; and Nobel Laureate Glenn T. Seaborg from the University of Califor- nia, Berkeley. Another event was a symposium on "America's Love and War with Sci- ence: The Coevolution of Science and Society in the 20th Century," featuring a panel of scientists and journalists. Crew gave an historian's perspective on how society's perceptions of risks and benefits change, using human ra- diation exposure as an example. And there was discussion over whether there is a new paradigm for science in the U.S. between Nobel Laureate chem- ist Jerome Karle, chief scientist of the Laboratory for the Structure of Matter at the Naval Research Laboratory, and Erich Bloch, distinguished fellow at the Council on Competitiveness and former NSF director. To complement the Smithsonian ex- hibit, an "electronic field trip" for mid- dle-school students has been devel- oped to make the show available to students who may not be able to visit it. To be conducted May 5 and 12, the field trip will include teacher support materials, an orientation videotape, and an interactive teleconference. In the two weeks following the field trip, students will be able to post ques- tions about the exhibit using a comput- er bulletin board that will be accessible through an 800 number. The field trip, produced by Fairfax County, Virginia, public schools, is supported by the NSF's National Science & Technology Week and by ACS, with the coopera- tion of the Smithsonian Institution. Linda Ross Chemical earnings rise again in first quarter In the first quarter of 1994, U.S. chemi- cal companies continued the earnings increases they began in the second quarter last year. Results reported by press time show further gains for ma- jor companies—although, when all fig- ures are in, growth for the industry probably will not match the 36% year- to-year jump seen in the fourth quar- ter of 1993. Early returns show that earnings for 18 large- and medium-sized chemical firms rose an average 15% in the first quarter on a sales increase of just 4%. Thus, profitability also climbed for the group—to an aggregate 6.1% from 55% in the same three-month period a year ago. While the average rise in earnings was 15%, few of the companies with increas- es were near that average. Firms with earnings increases usually registered a very healthy rise—especially among the very large firms. Dow Chemical, for in- stance, racked up an earnings increase of 35%, Monsanto's earnings rose 38%, and Union Carbide's earnings soared 69%. Earnings are from continuing op- erations, excluding significant unusual items. Of the 18 companies reporting so far, just seven had earnings declines from a year ago. And most of these drops could be called moderate, with large decreases only at Ethyl (33%) and Great Lakes Chemical (29%). Moreover, the improvement in earn- ings is spreading outside chemical firms (defined as those with more than 50% of their sales in chemicals) to diversified companies with chemical operations. For instance, earnings at diversified DuPont, the largest U.S. chemical producer, in- creased 39% for the quarter. Most of the rise came from its chemical-related oper- ations: After-tax income for polymers rose 91%, fibers were up 41%, and chemicals up 20%. By contrast, earnings at DuPont's petroleum unit grew less than 8%. Companies are still crediting lower costs for their increased earnings. For ex- ample, Carbide chairman Robert D. Kennedy says his company continues to benefit from progress in its cost reduc- tion efforts and from improved results in its joint ventures. Monsanto chairman Richard J. Ma- honey points out, "Earnings growth in the first three months of 1994 is a direct result of driving for shareholder value and ad- hering to three basic goals: achieve the full potential of key products, aggressively control costs and improve capital produc- tivity, and establish future products." Monsanto raised operating profits in all its business segments except its NutraSweet subsidiary. In addition to containing costs, chemi- cal companies are finally expanding their markets. Dow chairman Frank Popoff notes, "We're very encouraged by the improvement in our operating in- come, which reflects enhanced produc- tivity, continued economic growth in North America, and the beginning of an upturn in Europe." However, Dow also is seeing im- Earnings have begun to climb for many chemical Air Products Arco Chemical Dow Chemical Eastman Chemical Ethyl Georgia Gulf W. R. Grace Great Lakes Chemical IMC Fertilizer Loctite Lubrizol Monsanto Nalco Chemical Olin Praxair Rohm and Haas Union Carbide Witco FIRST-QUARTER 1994 Sales Earnings 3 ($ millions) $ 858.6 757.0 4,541.0 983.0 234.0 192.9 1,076.8 448.7 410.5 159.9 397.8 2,001.0 336.2 604.9 611.0 856.0 1,126.0 553.4 $ 73.1 45.0 171.0 56.0 14.0 12.7 38.2 66.9 5.4 18.3 43.3 194.0 33.8 15.3 42.0 67.0 71.0 22.0 a After-tax earnings from continuing operations, excluding significant earnings as a percentage of sales, def = deficit. Change from 1993 Sales Earnings 3% -1 4 4 -8 6 9 4 84 7 9 3 -1 2 3 4 -6 0 nonrecurring -3% -13 35 -5 -33 26 21 -29 def -7 22 38 -4 31 27 16 69 17 companies Profit margin b 1994 8.5% 5.9 3.8 5.7 6.0 6.6 3.5 14.9 1.3 11.4 10.9 9.7 10.1 2.5 6.9 7.8 6.3 4.0 1993 9.0% 6.8 2.9 6.3 8.3 5.6 3.2 21.9 def 13.2 9.7 7.3 10.4 2.0 5.6 7.0 3.5 3.4 and extraordinary items, b After-tax MAY 2,1994 C&EN 5

Transcript of Chemical earnings rise again in first quarter

Page 1: Chemical earnings rise again in first quarter

Β. St. John, director of the Plant Sci­ences Institute of the Department of Agriculture's Agricultural Research Service; and Nobel Laureate Glenn T. Seaborg from the University of Califor­nia, Berkeley.

Another event was a symposium on "America's Love and War with Sci­ence: The Coevolution of Science and Society in the 20th Century," featuring a panel of scientists and journalists. Crew gave an historian's perspective on how society's perceptions of risks and benefits change, using human ra­diation exposure as an example. And there was discussion over whether there is a new paradigm for science in the U.S. between Nobel Laureate chem­ist Jerome Karle, chief scientist of the Laboratory for the Structure of Matter at the Naval Research Laboratory, and Erich Bloch, distinguished fellow at the Council on Competitiveness and former NSF director.

To complement the Smithsonian ex­hibit, an "electronic field trip" for mid­dle-school students has been devel­oped to make the show available to students who may not be able to visit it. To be conducted May 5 and 12, the field trip will include teacher support materials, an orientation videotape, and an interactive teleconference.

In the two weeks following the field trip, students will be able to post ques­tions about the exhibit using a comput­er bulletin board that will be accessible through an 800 number. The field trip, produced by Fairfax County, Virginia, public schools, is supported by the NSF's National Science & Technology Week and by ACS, with the coopera­tion of the Smithsonian Institution.

Linda Ross

Chemical earnings rise again in first quarter In the first quarter of 1994, U.S. chemi­cal companies continued the earnings increases they began in the second quarter last year. Results reported by press time show further gains for ma­jor companies—although, when all fig­ures are in, growth for the industry probably will not match the 36% year-to-year jump seen in the fourth quar­ter of 1993.

Early returns show that earnings for 18 large- and medium-sized chemical

firms rose an average 15% in the first quarter on a sales increase of just 4%. Thus, profitability also climbed for the group—to an aggregate 6.1% from 55% in the same three-month period a year ago.

While the average rise in earnings was 15%, few of the companies with increas­es were near that average. Firms with earnings increases usually registered a very healthy rise—especially among the very large firms. Dow Chemical, for in­stance, racked up an earnings increase of 35%, Monsanto's earnings rose 38%, and Union Carbide's earnings soared 69%. Earnings are from continuing op­erations, excluding significant unusual items.

Of the 18 companies reporting so far, just seven had earnings declines from a year ago. And most of these drops could be called moderate, with large decreases only at Ethyl (33%) and Great Lakes Chemical (29%).

Moreover, the improvement in earn­ings is spreading outside chemical firms (defined as those with more than 50% of their sales in chemicals) to diversified companies with chemical operations. For instance, earnings at diversified DuPont, the largest U.S. chemical producer, in­creased 39% for the quarter. Most of the rise came from its chemical-related oper­

ations: After-tax income for polymers rose 91%, fibers were up 41%, and chemicals up 20%. By contrast, earnings at DuPont's petroleum unit grew less than 8%.

Companies are still crediting lower costs for their increased earnings. For ex­ample, Carbide chairman Robert D. Kennedy says his company continues to benefit from progress in its cost reduc­tion efforts and from improved results in its joint ventures.

Monsanto chairman Richard J. Ma-honey points out, "Earnings growth in the first three months of 1994 is a direct result of driving for shareholder value and ad­hering to three basic goals: achieve the full potential of key products, aggressively control costs and improve capital produc­tivity, and establish future products." Monsanto raised operating profits in all its business segments except its NutraSweet subsidiary.

In addition to containing costs, chemi­cal companies are finally expanding their markets. Dow chairman Frank Popoff notes, "We're very encouraged by the improvement in our operating in­come, which reflects enhanced produc­tivity, continued economic growth in North America, and the beginning of an upturn in Europe."

However, Dow also is seeing im-

Earnings have begun to climb for many chemical

Air Products Arco Chemical Dow Chemical Eastman Chemical Ethyl

Georgia Gulf W. R. Grace Great Lakes Chemical IMC Fertilizer Loctite

Lubrizol Monsanto Nalco Chemical Olin Praxair

Rohm and Haas Union Carbide Witco

FIRST-QUARTER 1994 Sales Earnings3

($ millions)

$ 858.6 757.0

4,541.0 983.0 234.0

192.9 1,076.8

448.7 410.5 159.9

397.8 2,001.0

336.2 604.9 611.0

856.0 1,126.0

553.4

$ 73.1 45.0

171.0 56.0 14.0

12.7 38.2 66.9 5.4

18.3

43.3 194.0 33.8 15.3 42.0

67.0 71.0 22.0

a After-tax earnings from continuing operations, excluding significant earnings as a percentage of sales, def = deficit.

Change from 1993 Sales Earnings

3% -1

4 4

-8

6 9 4

84 7

9 3

-1 2 3

4 -6

0

nonrecurring

-3% -13

35 -5

-33

26 21

-29 def -7

22 38 -4 31 27

16 69 17

companies

Profit marginb

1994

8.5% 5.9 3.8 5.7 6.0

6.6 3.5

14.9 1.3

11.4

10.9 9.7

10.1 2.5 6.9

7.8 6.3 4.0

1993

9.0% 6.8 2.9 6.3 8.3

5.6 3.2

21.9 def 13.2

9.7 7.3

10.4 2.0 5.6

7.0 3.5 3.4

and extraordinary items, b After-tax

MAY 2,1994 C&EN 5

Page 2: Chemical earnings rise again in first quarter

NEWS OF THE WEEK

provement because of cost containment. Popoff says that in the first quarter his company achieved savings in research, promotion, selling, and administrative expenses of $40 million over the same period a year ago. And this happened despite additional expenses following consolidation of two pharmaceutical subsidiaries.

William Storck

Oriented zeolite growth on surfaces achieved The first oriented growth of molecular sieve (zeolite) crystals on surfaces has been achieved by graduate student Sue Feng and chemistry professor Thomas Bein of Purdue University.

The work, reported in last week's Nature [368, 834 (1994)], represents a new thrust in the synthesis of zeolitic materials. It could potentially lead to the ability to achieve greater control over physical and chemical processing with controlled-porosity media.

In their research, Feng and Bein de­posited an analog of zeolite X by crystal­lization on gold-coated silicon substrates modified with metal phosphonate multi­layer films. The organophosphonate films promote nucleation and growth of the zinco-phosphate zeolite from the synthesis mixtures.

Scanning electron micrographs show that single layers of the zinco-phosphate crystals are produced, with more than 90% of them having their (111) faces ori­ented to the substrate. The nearly perfect orientation of the crystals is further sup­ported by the evidence of diffraction patterns.

Bein attributes ordered growth of the zinco-phosphate crystals in part to the growth control provided by the organ­ophosphonate layer. Only a triple layer of phosphonate-zirconium-bisphos-phonate is found to be effective.

Potential applications for highly or­dered zeolites include catalytic mem­branes—possibly incorporating en­caged metals—and manufacture of highly sensitive chemical sensors for environmental monitoring. For exam­ple, oriented zeolitic materials might provide restricted access only for spe­cific molecules to the surface of field-effect transistors or other electronic sensors.

The Purdue group's research thus far

Scanning electron micrograph shows molecular sieve (zeolite) crystals grown on gold substrate modified with organophosphonate films (bar = l(tym).

has been focused on the zinco-phos­phate zeolites, but other materials might prove to be of greater utility. Bein ex­plains that "We are now investigating the application of our synthesis tech­niques to a broader range of zeolites . . . such as aliurrinophosphates."

Joseph Haggin

Bills for pesticide-food safety reform unveiled The Clinton Administration has un­veiled its long-awaited legislation to re­form U.S. pesticide laws, particularly as they affect food safety. However, neither industry nor some public interest groups are happy with the provisions.

The legislative proposal, incorporat­ed in two bills, is very similar to the broad reform policy for pesticides and food safety outlined by the Adminis­tration last fall (C&EN, Sept. 27, 1993, page 6). The bills call for setting stricter tolerance levels for pesticide residues in food, paying particular attention to safety factors for "potentially sensitive subpopulations" and for children.

The bills also would modify the Delaney amendment, which prohibits addition into processed food of any chemical known to cause cancer. Pesti­cide residues would be allowed if sci­entific evidence indicates they pose no health hazard.

The legislation includes incentives for development of alternative pest man­agement materials and provides for priority review for "reduced risk pesti­cides." It bans export of pesticides not

approved for use in the U.S. because of health concerns, with some limited exceptions.

The bills were unveiled at a Washing­ton, D.C., press conference featuring of­ficials from the Environmental Protec­tion Agency, Food & Drug Administra­tion, and Department of Agriculture, and key members of Congress. EPA Ad­ministrator Carol M. Browner noted that "after a year of hard work, we have a sound, realistic proposal for ensuring a safe food supply for all Americans and our children. This comprehensive pack­age represents real change."

Sen. Edward M. Kennedy (D.-Mass.), chairman of the Senate Committee on Education & Labor, hailed the unprec­edented cooperation among EPA, USDA, and FDA that led to the bills, calling it overdue: "The current regula­tory scheme is plagued with loopholes. Older pesticides are tolerated in the ab­sence of complete information about their health effects. We are gambling with public health on a broad range of potentially cancer-causing and toxic pesticides."

Observers outside government are less pleased. The legislation "imposes overly conservative, inflexible standards and procedures to regulate pesticides," notes Jay J. Vroom, president of the Na­tional Agricultural Chemicals Associa­tion. And Juanita Duggan, senior vice president of government affairs at the National Food Processors Association, says, "After waiting for seven months, EPA has put forward legislation that is not science based and falls far short of what is needed to reform the nation's regulation of pesticides."

However, the Environmental Work­ing Group (EWG)—which has been ac­tively pushing to tighten restrictions on pesticide residues in food—calls the leg­islation too weak. "It is a good start, but it doesn't go far enough to remove from use the highest risk pesticides, those list­ed as probably human carcinogens," says EWG legislative specialist Susan Elderkin.

And Greenpeace, which is waging a major campaign over pesticide exports, assails the legislation as "more smoke than fire." Greenpeace pesticide infor­mation coordinator Sandra Marquardt adds, "The export provisions of the [legislation] really amount to a contin­uum of the status quo."

In any case, prospects for pesticide reform aren't good this year. There will

6 MAY 2,1994 C&EN