Corrected: INSIGHT: Bayer expects technology to drive growth

11 June 2010 17:58  [Source: ICIS news]

Correction: In the ICIS news story headlined "INSIGHT: Bayer expects technology to drive growth" dated 11 June 2010, please read in the seventh paragraph Dusseldorf... instead of Frankfurt.... A corrected story follows.

By Nigel Davis

Polycarbonate can replace glass in automotive glazing LONDON (ICIS news)--The top flight chemical companies recognise that they have to secure technological as well as geographical footholds if they are to lift growth.

The ability to really capture value from the wider use of more sophisticated materials is the goal. The pursuit, essentially, is never ending.

A firm can rest on its laurels, or the returns from one business or another, only for so long; it needs to apply resources to help produce a near constant flow of innovation.

And while great deal of money can be made in commodities, competitive advantage in basic chemicals lies in the hands of those with the real cost largely feedstock cost  advantage.

Technology provides another barrier to entry to firms that are seeking new niches away from increasingly competitive markets.

Producers with the capability, too, are trying to latch on to what are widely recognised as regional and global mega trends”. Among them are the need for better water management and distribution and increased energy efficiency.

The big K 2010 plastics and rubber trade fair this year in Dusseldorf, Germany, will provide a showcase for many.

Our materials have the potential to bring about a major improvement in the energy efficiency of every sector of the economy,” said Bayer MaterialScience CEO Patrick Thomas on Friday at a pre-K briefing.

Bayer reckons it can help meet the global energy and climate change challenges through innovation and with sustainable technologies and processes.

Similar messages have been heard in recent weeks for other firms attending K, which will showcase the application of novel materials technology.

Global shifts such as societal demographics, climate change and energy shortages are driving our search for sustainable solutions that can help meet future needs,” Thomas said.

For Bayer, those solutions centre on novel polycarbonate products and extensive use of polyurethane insulation. Polyurethane is the most effective insulating material by unit weight, Bayer says, and real reductions in carbon dioxide emissions could be achieved by its wider use in buildings.

Polyurethane composites are replacing metal in the roofs of automobiles and polycarbonate is being more widely used as a glazing material.

Even more seemingly esoteric uses of polycarbonate will play a role in helping reduce energy consumption  polycarbonate is one of the few materials that can resist the sort of temperatures that energy-efficient, light-emitting diode bulbs run at, for instance.

Insulation has a major role to play in refrigerated transport and cold store. Thomas talked about how adhesives that are used to bond widened turbine blades increasingly are polyurethane, rather than epoxy-based. Bayer’s new carbon nanotubes can be incorporated into the blades to reduce weight.

The broad brush of applications of materials technology is the driving force for the company and appears to be paying dividends.

First-quarter 2010 sales were up 9.9% on the fourth quarter of last year and at €2.22bn ($2.67bn), 35.5% higher than the particularly weak 2009 first quarter.

EBITDA (earnings before interest, tax, depreciation and amortisation) for the latest quarter was at €287m compared with first-quarter 2009 EBITDA loss €116m.

The second quarter appears to have gone well, too, and Thomas said he expected further growth in sales and profits compared with the first three months of the year.

Pulling away faster from the slump, the company relies strongly on its innovation and problem-solving abilities to help derive more from what many suspect are principally commodity materials businesses.

Thomas confirmed an earlier full-year 2010 forecast of continued market recovery and an approximately 20% increase in sales compared with 2009, on a constant currency and portfolio-adjusted basis.

($1 = €0.83)

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By: Nigel Davis
+44 20 8652 3214

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