22 July 2008 16:19 [Source: ICIS news]
LONDON (ICIS news)--Both Celanese and industry giant DuPont have demonstrated that performance in the current climate is all about being able to pass on higher costs and being in the right place to capture growth.
DuPont said on Tuesday that it had seen raw materials, energy and transport costs rise 15% in the second quarter. But it had mitigated the effect by pushing prices up 7% and by capturing greater volumes.
Sales growth came particularly from the company’s increasingly successful agriculture business and strong global demand for corn, soybean and crop protection products.
DuPont’s Pioneer seeds business is the world’s second largest and is in the midst of major product launches.
The Y series soybean launch for the 2009 growing season is the biggest in Pioneer’s 80-year history and expected to boost soybean yields markedly.
The company is capturing growth in Asia and Latin America across its portfolio to help offset the weakness in the ?xml:namespace>
Its second quarter Asia-Pacific volumes were up 11% and volumes were 5% higher in
By driving costs down hard, DuPont is adapting to what chairman and CEO Charles Holliday has called the “new reality” of significantly higher commodity costs.
Fixed costs as a percentage of sales improved 200 basis points from the equivalent 2007 quarter, the company said
DuPont’s agriculture and nutrition profits were up 18% on 23% higher sales.
Pioneer’s soybean seed sales were much higher while higher
Coatings profits were 9% higher on a 10% sales increase as demand and returns grew in Asia and
The earnings trend in the other operating segments was down but gains were made in some business lines as price increases and additional volumes were gained, largely outside the
DuPont’s challenge, clearly, is to adapt to the new reality of higher oil- and agriculture-based feedstock and energy costs. US markets remain difficult.
The company wants to capture agriculture growth in
Of real benefit have been the ongoing productivity efforts which are planned to save $400m in 2008 and $1.7bn between 2008 and 2010.
Holliday has talked about “excellent” execution from DuPont’s teams that have made the latest level of performance possible.
Celanese does not benefit from an agriculture business but its presence in materials in Asia and the
It says growth in
Second-quarter operating profit more than doubled to $207m from $71m in the second quarter of last year. The gain was made on 20% higher sales at $1.87bn.
Celanese has developed its integrated production complex at
The company will be burdened by higher raw material and energy costs and there is growing concern about slowing growth in
In his forward look, DuPont's Holliday maintained that high oil-based and agricultural commodity prices are the new norm.
But he added that the recent downtrends in the
A focus on energy saving and safety in the first two sectors, particularly, will provide opportunities for existing and future DuPont products.
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