Several major U.S. chemical firms posted first-quarter earnings that exceeded analysts’ expectations despite continued weakness in the global economy. Company executives went into the quarter anticipating a weak sales environment and worked to divest underperforming assets and raise prices on specialty products.
DuPont’s earnings per share of $1.56 were a few cents ahead of analysts’ forecasts. The firm reported that volumes edged up 2%. However, earnings declined by 5.7% from last year’s first quarter, to $1.5 billion, primarily because of weak prices for titanium dioxide. In a conference call with analysts, DuPont CEO Ellen J. Kullman pointed out that the white pigment business brings in needed cash but also delivers high volatility, which, she said, “drives everyone to distraction.”
Also a drag on DuPont’s earnings was lower demand from industrial markets such as auto and solar panel manufacturing. On the positive side, higher prices and strong volumes for seeds and crop protection products drove the firm’s agriculture sales up 14% compared with the year-ago quarter. DuPont’s divestment of its performance coatings business allowed it to buy back $1 billion in shares and reduce debt.
At Dow Chemical, price and volume management, along with a “laserlike focus on strategic portfolio management,” combined to push earnings to $819 million, up almost 15% compared with the first quarter of 2012, according to CEO Andrew N. Liveris. The firm’s earnings per share of 69 cents beat estimates by 8 cents. Sales were down 2.3% from 2012, but they were generally flat when excluding the impact of changes in the feedstocks and energy segment.
Like DuPont, Dow grew its agriculture business by 14% compared with last year and undertook debt reduction, paying down $900 million in the quarter. In performance materials, volumes sank but prices edged up.
Chemical analysts were especially impressed by results from Celanese, where per-share earnings of $1.14 were 36 cents higher than expected. The result highlights the company’s “lowest-cost position in acetyls, a high-growth engineered plastics business, and a stable, high-margin acetate tow business,” wrote David Begleiter, an analyst at Deutsche Bank, in a note to investors.
Ashland and PPG Industries also exceeded analysts’ predictions. At Ashland, the Valvoline motor oil and oil change businesses had a strong quarter, and specialty ingredients held up well during a tough economic environment, according to CEO James J. O’Brien. PPG reported that it worked to control costs during the quarter and took advantage of strengthening coatings markets including automotive, aerospace, and U.S. construction.
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