DuPont Co., A. Schulman Inc. and Rogers Corp. thrived amid the stock market chaos of 2014, but the other 12 publicly held materials firms tracked by Plastics News didn't fare as well.
DuPont's per-share stock price jumped 16 percent in the 2014 calendar year, while Schulman's rose 18 percent. Rogers, a maker of urethane foams, fluoropolymer laminates and thermoplastic circuit materials based in Rogers, Conn., outdid them both, as its stock price soared almost 37 percent in those 12 months.
Rogers' rise was fueled by third-quarter sales that were the highest in the firm's history. In November, stock research website Zacks.com wrote that Rogers “has seen solid earnings estimate revision activity over the past month, suggesting analysts are becoming a bit more bullish on the firm's prospects in both the short and long term.”
DuPont's performance was affected in part by its decision to spin off some of its business units and by its ongoing battle with activist investor Trian Fund Management LP. In November 2013, DuPont announced plans to spin off its Performance Chemicals unit — including Teflon-brand fluoropolymer — into a separate public company. Trian officials later said that in addition to that spinoff, DuPont should split itself into two separate firms, including one that would contain its Performance Materials unit, which makes nylon and other plastic resins, as well as polyester and nylon film. These events at times impacted the firm's stock in ways not related to profitability.
Double digit stock price gains posted by DuPont, Schulman and Rogers came during a year in which the overall Dow Jones Industrial Average grew more than 8 percent, but also suffered four significant declines in February, August, October and December. These declines dampened stock-price gains by dragging down entire investment sectors.
Materials firms Axiall Corp., Dow Chemical Co., PolyOne Corp. and Celanese Corp. each posted stock price gains of 4 to 9 percent during 2014. These increases would have been fine in many years, but they paled beside the double-digit gains posted by these stocks from mid-2013 to mid-2014. Per-share prices at LyondellBasell Industries, Cytec Industries and Westlake Chemical Co. each eked out gains of less than 2 percent in 2014. This especially was a change of pace for Houston-based Westlake, which had been one of the highest-flying plastics and chemicals stocks of recent years.
The five remaining materials firms tracked by Plastics News — Huntsman Corp., Kraton Performance Polymers, Eastman Chemical Co., Hexcel Corp. and Omnova Solutions — each were anxious to flip the calendar to 2015. Per-share prices at those firms fell 4 to 11 percent in 2014. Dow and Omnova also tangled with activist investors in 2014, with both firms being pressured to divest or spin off parts of themselves.
But 2015 hasn't offered much solace for this group of 15 firms so far in 2015. As of early trading Jan. 20, the Dow was down more than 2 percent so far in the year's early going. Per share prices for 14 of the 15 have fallen since Jan. 1, with Hexcel breaking from the pack with a price gain of less than 1 percent. Omnova and Schulman in particular are hoping 2015 improves as it moves along, as their per-share stock prices have fallen 10 and 17 percent, respectively, so far this year.
Thankfully, there are reasons for optimism among this group. Global oil prices have tumbled more than 50 percent since mid-2014, and they're taking resin prices down as well, although at a lesser rate. This should improve profit margins for plastic materials firms and processors alike.
Lower oil prices also mean lower gasoline prices, putting more money in the pockets of North American consumers — money that can be spent on goods and services that are users of plastics. U.S. GDP growth also was solid in 2014 — with second-quarter growth of 4.6 percent followed by third-quarter growth of 5 percent, and is projected to be strong in 2015 as well.
By the end of the year, materials firms' January stock price slumps may be distant memories.
Esposito is an Ohio-based Plastics News senior reporter.