Materials firms faced sales struggles in '12

By Frank Esposito
Senior Staff Reporter

Published: January 31, 2013 4:57 pm ET
Updated: January 31, 2013 5:09 pm ET

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Topics Topics, Materials, Nylon 6/6, Suppliers, Materials Suppliers, Financial

AKRON, OHIO -- 2012 wasn't a great year for plastic-related sales at Dow Chemical Co., while full-year plastics results were mixed at DuPont Co. and Celanese Corp. and trended up at Omnova Solutions Inc.

Sales in Dow's Performance Plastics unit — including its polyethylene, elastomers and packaging businesses — fell almost 11 percent to $14.5 billion in 2012, as pretax profit slid 12 percent to just over $3 billion. The firm's Performance Materials business — including polyurethane and epoxies — saw 2012 sales drop by 7 percent to $13.6 billion, while the unit's pretax profit plummeted more than 40 percent to just over $1 billion.

In spite of the declines, those two units remained Dow's two largest, based on annual sales. The units accounted for almost half of Dow's 2012 sales total of $56.8 billion. That total was down 5 percent from 2011, and the firm's profit fell more than 60 percent to $1.1 billion in the same comparison. The profit dive was greatly impacted by a fourth-quarter restructuring charge of almost $1 billion.

The second half of 2012 "saw significant deterioration in the markets we serve, particularly in China," Dow Chairman and CEO Andrew Liveris said in a Jan. 31 news release. "In response, Dow identified and took aggressive action to mitigate the effects of a slow-to-no-growth global environment."

For Midland, Mich.-based Dow, that "aggressive action" includes the planned closing of 20 plants that employs a total of 2,400. Plastics materials plants in Belgium and Japan are among those to be closed. The firm also in December said that in the next 12 months it would sell off businesses with $1 billion in annual revenue.

Annual sales for the Performance Materials unit of Wilmington, Del.-based DuPont fell 5 percent to $6.4 billion, as the unit's pretax operating income jumped 21 percent to more than $1.1 billion. The unit includes DuPont's nylon resin and compounds businesses, as well as other specialty resins.

For Performance Materials in the fourth quarter, stable packaging markets and strong demand in the North American automotive market were partially offset by softness in the industrial and electronics markets and a weak Europe, officials said in a Jan. 29 news release.

Company-wide, DuPont's sales were up 3 percent to almost $35 billion, although the firm's profit tumbled almost 20 percent to less than $3 billion. In November, officials announced plans to cut 1,500 jobs — about 2 percent of the company's work force — in the next 12-18 months.

"DuPont stands stronger today than it did a year ago," DuPont Chairman and CEO Ellen Kullman said in the release. "Our segments delivered innovation, productivity and integration cost synergies. This, coupled with a record year in new product introductions, has strengthened our market position."

Dallas-based Celanese saw a similar picture with its Advanced Engineered Materials unit, which includes its market-leading acetals business. AEM sales slipped almost 3 percent to less than $1.3 billion, but operating profit surged more than 13 percent to $86 million.

In the fourth quarter, the unit "delivered growth...despite a challenging economic environment in Europe and normal seasonality," officials said in a Jan. 28 news release. Total corporate sales at Celanese fell 5 percent to $6.4 billion in 2012, as profit remained roughly flat at $605 million.

"Celanese completed 2012 with strong fourth quarter results reflecting the breadth of our global footprint," chairman and CEO Mark Rohr said in the release. The firm also showed improved financial results even with "a challenging economic environment and continued trough-like demand for acetyl products and derivatives, he added.

At Omnova in Fairlawn, Ohio, total sales for 2012 fell 6 percent to $1.13 billion, but the firm showed a profit of almost $28 million after losing almost $3 million in 2011.

"During the year, we made structural improvements in our business portfolio, and took many other positive actions that drove continued improvement in our full-year profitability," Chairman and CEO Kevin McMullen said in a Jan. 22 news release.

Sales in Omnova's specialty chemicals business — including emulsion polymers — fell almost 6 percent to just over $521 million. Operating profit in Performance Chemicals — including specialty chemicals — dropped almost two percent to just under $90 million.

Omnova's sales of laminates and performance films - including PVC-based products - grew 7.5 percent to $144 million. Fourth-quarter laminate sales grew across most market segments led by flooring, appliances, kitchen and bath, store fixtures and recreational vehicles, officials said. Coated fabrics sales - including products using PVC and polyurethane — increased almost 3 percent for the year to $117 million.

The firm's Engineered Surfaces unit — which includes those two businesses — posted a 2012 operating profit of $9.3 million after recording an operating loss of $3.1 million in 2011.

"As we look forward to 2013, we are encouraged by a number of actions and market developments that are expected to gain traction starting in the second quarter," McMullen added.

Omnova also "continues to make progress on productivity and cost reduction actions" with more than $8 million of non-raw material improvements expected in 2013, he said.


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Materials firms faced sales struggles in '12

By Frank Esposito
Senior Staff Reporter

Published: January 31, 2013 4:57 pm ET
Updated: January 31, 2013 5:09 pm ET

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