Leading specialty chemical suppliers and paint manufactuers enjoyed healthy earnings in the third quarter, largely on the strength of higher selling prices and high-peforming market sectors.
Among the highlights:
Sales at BASF Group—a leading chemical company whose portfolio includes coatings, performance polymers, dispersions and coatings, and oil and gas, among other markets—rose 11.6% to $17.6 billion in the third quarter. Although this represents a slower growth rate compared to the first half, BASF executives report positive business developments amidst challenges. For instance, BASF Group was largely able to pass on increased raw material costs to the market while increasing sales despite the suspension of oil production in Libya as well as negative currency effects.
Third-quarter net earnings at Cytec Industries—a global specialty chemicals and materials company serving the aerospace, adhesives, automotive and industrial coatings, inks, mining and plastics markets—totalled $47.9 million (or $0.98 per diluted share) on net sales of $778 million. This represents increases of 27% and 11%, respectively, over the same period last year. Earnings from discontinued operations (Building Block Chemicals) were $7.7 million. Excluding the special item and earnings from discontinued operations, net earnings from continuing operations attributable to Cytec were $32.2 million or $0.64 per diluted share.
Cytec Coating Resins sales increased 6% to $387 million, whle operating earnings decreased to $18.0 million. Overall selling volumes in this group were down 10% versus the third quarter 2010, due to weak demand in many of our industrial markets and inventory control measures by customers, impacting most product lines particularly in North America and Europe. Selling prices increased sales by 10% and the impact of changes in exchange rates increased sales by 6%. Meanwhile, Cytec Engineered Materials sales increased by 18% to $230 million, with operating earnings increasing to $33.1 million.
“We continue to experience strong demand in our Engineered Materials business driven by the build rate increases in both new and legacy aircraft programs,” said Shane Fleming, chairman, president and CEO. “Product demand within our In Process Separation segment also remains strong due to continued high production rates in the base metal markets we serve and our success in developing and commercializing new applications with our advanced separation technologies. The weakening demand in industrial markets impacted our Coating Resins and Additive Technologies segments particularly during the latter part of the quarter, yet we have demonstrated good discipline increasing price to offset raw material cost increases in these businesses. Overall, we delivered 36% as adjusted operating earnings growth (excluding special item) versus the third quarter last year.”
DuPont reported third-quarter income of $452 million, or 48 cents a share, up from $367 million, or 40 cents a share, a year earlier. Excluding acquisition-related expenses, earnings in the latest quarter were 69 cents a share. Total sales were up 33% to $9.4 billion, including a 38% rise in developing markets sales. Volume increased about 1% and prices rose 15%. Earnings rose by 23%, largely on higher prices for titanium dioxide, a widely used paint pigment.
Revenue improvements were seen in all major segments, with particularly strong sales in emerging markets. Specifically, growth in demand for DuPont’s agricultural products and further expansion into food ingredient and enzyme markets offset destocking in photovoltaics and specialty polymers. Segment pre-tax operating income excluding significant items increased 50 percent to $1.1 billion, largely driven by improvements in the Performance Chemicals and Agriculture segments and the acquisition of Danisco, which specializes in good ingredients, enzymes, and bio-based solutions.
“The resilience and diversity of DuPont’s business portfolio was evident in our strong
third quarter results,” said Ellen Kullman, DuPont chair and CEO. “Despite turbulent global economic and market conditions, we delivered solid growth through innovative products and process technologies, disciplined execution and continued productivity. Our portfolio is further strengthened by the rapid integration of Danisco, continued capacity expansions and selective growth investments across many of our businesses.”
PPG Industries reported net sales for the third quarter 2011 of $3.8 billion, an increase of 11 percent versus the prior year’s third quarter. Net income for the quarter increased to $311 million, or $1.96 per diluted share. By comparison, third quarter 2010 net sales were $3.5 billion, and net income was $262 million, or $1.58 per diluted share.
“This is the fifth consecutive quarter in which we eclipsed our prior quarterly earnings record,” said Charles E. Bunch, PPG chairman and CEO. “This consistent improvement in performance, especially in light of today’s economic backdrop, demonstrates the value of our management’s aggressive focus on operations and the continuing benefit of the structural changes that we have made to the company the past few years, including lowering our cost base and expanding in emerging regions. In addition, these results reflect the continuing benefits of our disciplined deployment of our strong cash position.”
Both the Performance Coatings and Optical and Specialty Materials segments delivered record third quarter earnings, while the Industrial Coatings segment delivered its best third quarter earnings in more than a decade on emerging-region growth and stronger global auto production. Architectural coatings demand was down slightly due to continued anemic construction markets. Results in the Commodity Chemicals segment were excellent despite several unplanned production outages that crimped sales volumes, increased maintenance costs and reduced capacity utilization. Finally, higher planned maintenance resulted in lower Glass segment results.
Pricing on a corporate basis increased for the sixth consecutive quarter, as all 13 PPG businesses implemented higher pricing this quarter to further counter higher input costs. “PPG’s overall volumes were flat year-over-year,” Bunch explained. “Demand in most markets in North America was up modestly and fairly consistent with the prior quarter’s growth rate. Continued volume gains in emerging regions such as Asia/Pacific and Latin America offset lower demand in Europe, which was driven principally by the company’s consumer-oriented businesses.”
Sherwin-Williams Co.’s third-quarter earnings rose 2.6%, as higher sales buoyed by price increases helped to offset rising materials costs. Sherwin-Williams posted a profit of $179.9 million, or $1.71 a share, up from $175.3 million, or $1.60 a share, a year earlier. In the latest results, acquisitions diluted income 2 cents a share. Revenue increased 14% to $2.48 billion. Sales in the company's paint-stores group rose 10% thanks to higher selling prices and improving domestic architectural paint sales volume across most sectors.