Comparative chemicals data chart steep 2001 downturn

10 April 2002 17:50  [Source: ICIS news]

The worst year in decades for most chemicals producers has thankfully passed into history but the downturn is clearly far from over. In the next few weeks, first quarter financial results are expected to show companies still battling against atrocious market conditions despite some sequential quarter to quarter improvement.

Volumes are reportedly up slightly and some product prices have firmed. But with rising oil costs it remains to be seen what impact a slight improvement will have on corporate bottom lines.

It is received wisdom that the chemicals sector – bulk and specialty – will be in the doldrums for the first half of this year. There is growing concern, however, about the probability of a ‘W’ shaped recovery and no real pick up until 2003. The numbers here show just how far some companies fell in 2001. They will need a lot of help from the market if they are to have any chance of turning around fast.

My table gives some idea of the comparative financial performance of the top global chemical companies in 2001. Of particular significance in the comparative results is the steep decline in sales reported by the petrochemical, bulk and diversified chemical producers. Petrochemicals were certainly hit hardest throughout 2001, first in the US but later in Europe, Asia and across the globe. The manufacturing recession in the US took its toll among all producers in 2001 but volumes were eventually hit in Europe and elsewhere. The sales declines also reflect the sharp drop in commodity chemicals, petrochemical and plastic product prices.

It was hardly surprising that companies were unable to stem the tide of falling profits despite a lot of effort to control costs. The table shows some of the steepest profit falls in the sector for years but a better performance overall for some firms that during the downturn in the early 1990s.

The specialty, pharmaceuticals/life sciences sectors were hardly immune from the full impact of the downturn hence the relatively poor year to year performance from companies in the table which are generally described as specialty or diversified chemical producers. These numbers provide a stark reminder of just how bad the chemicals business was across the board in 2001.

Producers will, no doubt, struggle hard this year to recover margins but the cost controls and new efficiencies just put in place would serve them well in the upturn. Performance among comparable companies will be watched carefully as different market segments show signs of recovery.

Financial performance of leading chemical producers in 2001

Company	Sales	Change	Profits	Change	Margin
	($m)	(%)	($m)	(%)	(%)
BASF	28017	-9.6	5050	372.4	18.0
Dow	27805	-5.9	35	-98.9	0.1
DuPont	24700	-12.7	2574	-50.4	10.4
ExxonMobil	19264	-24.9	882	-24.0	4.6
Atofina	16897	-5.8	93	-33.7	0.6
Mitsubishi Chem*	13977	na	na	-	-
Akzo Nobel	12164	0.8	967	-27.9	8.0
BP	11515	2.4	128	-83.2	1.1
Degussa	11141	1.1	878	-1.3	7.9
Shell	10616	-30.2	241	-73.9	2.3
ICI	10087	-17.1	215	-12.0	2.1
Bayer	9331	0.1	22	-97.1	0.2
Huntsman	8500	na	na	-	-
Sumitomo Chem*	8328	na	na	-	-
Sabic	7973	12.0	1067	-34.4	13.4
Solvay	7672	2.3	522	-3.5	6.8
DSM	6034	-12.5	449	-3.5	7.4
Eastman	5384	1.7	-126	-122.4	-2.3

Sales and profits data in US dollars, comparisons in local currencies. Chemicals only for oil major affiliates, corporate data elsewhere. Profits are pre-tax except for ExxonMobil, Atofina, BP and Shell, which report net operating figures, and BP which reports replacement cost operating profits. BASF profits include extraordinary income from the sale of a pharmaceuticals subsidiary. *31 March 2001 year-end sales figures for comparison only.

By: Nigel Davis
+44 20 8652 3214

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