US petchems recovering, but unclear how much – Kirby CEO

29 April 2010 19:31  [Source: ICIS news]

HOUSTON (ICIS news)--The US petrochemical business improved noticeably in the first quarter but by how much is still difficult to quantify, the chief of the nation's largest inland barge operator said on Thursday.

Kirby CEO Joe Pyne said the company's first quarter showed higher demand and equipment use from improved petrochemical production in the US Gulf region, but that was largely driven by plant outages.

"During the month of April, the improved demand has continued," Pyne said. "However, time will tell if this improvement is sustainable."

The US petrochemical industry had seen capacities reduced due to shutdowns this year.

Houston-based Kirby derives most of its business from petrochemical shipments on the Intracoastal Waterway near the Gulf of Mexico and the lower Mississippi river system.

Pyne said Kirby's contract and spot business had held firm for most of this year at a 75%-25% ratio, while historically the ratio was 70%-30%. Pyne said he did not think it would drop to the traditional level anytime soon.

"The great recession has been a strange recession," Pyne said. "The recovery was supposed to have been slower. But today we're seeing a pretty sharp recovery."

That was not the case for Kirby's profits, however.

The company reported a $24.7m (€18.7m) profit in the quarter, down about 12% from $28m in the first quarter of 2009, with most of the decline due to charges for retirements and staff reductions, according to Kirby.

Pyne noted that the earnings fell within the firm's guidance to analysts.

Kirby's stock, which trades on the New York Stock Exchange under the symbol KEX, moved at $43.33/share in mid-morning, up almost 5% from a close of $41.38 on Wednesday.

Pyne added that Kirby's marine transportation segment showed higher business level, reflecting an overall economic recovery in progress for the petrochemical business.

"We clearly think there is real demand growth out there, but it's hard to say how much," Pyne said.

($1 = €0.76)

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By: Lane Kelley
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