Stepan's Q3 net profits soar on disposals, sales

22 October 2008 15:35  [Source: ICIS news]

TORONTO (ICIS news)--Stepan’s third-quarter net income increased more than fivefold to $17m (€13m) from $3m a year earlier on one-off gains and a 28% increase in sales, the US chemicals producer said on Wednesday.

 

Results included $11.3m in gains on the sale of a product line and a land sale, the company added. 

 

Stepan’s net sales for the three months ended 30 September were $433m, up from $338m a year earlier, mainly due to higher selling prices, increased volumes and currency translation effects, it said, adding gross profits rose 23% to $42.8m.

 

Gross profits in Stepan’s surfactants business improved due to a better customer and product mix and recovery of past margin erosion caused by the rise of raw material costs, the company said.

 

In the polymers bussiness, gross profits fell due to higher raw material and logistic costs, it added.

 

"Excluding our product line and land sale gains, we are pleased we were able to deliver strong third quarter earnings and continue the momentum we established in the first two quarters," said CEO Quinn Stepan.

 

Surfactants, a market that was historically less impacted by a recession than others, continued to drive Stepan’s results, the company said.

 

Meanwhile, Stepan’s polyol volumes continued to grow due to higher global insulation standards although margins declined during the third quarter, it said.

 

Price increases for polyol had been announced for the fourth quarter, it added.

 

As for merchant phthalic anhydride (PA), sales were not expected to recover for several quarters due to the impact of the recession, Stepan said, but added that it was using increasing volumes of PA internally in its polyol product line.

 

Stepan also said that its PA and polyols plants at Millsdale, Illinois, would undergo a maintenance turnaround in the fourth quarter, resulting in higher outsourcing and maintenance costs in the polymers segment.

 

Looking ahead, the company expected to deliver record full-year results despite the difficult economic environment as cost reductions and other measures would help it minimise the impacts of the recession, it said.

 

($1 = €0.76)

 

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By: Stefan Baumgarten
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