16 November 2010 18:56 [Source: ICIS news]
By Nigel Davis
Compared with the still depressed 2009 third quarter, players in numerous segments have shown how strongly volumes have recovered and how adeptly they have passed their own raw-material costs on to the consumer.
Operating rates have moved higher - but in some mainstream markets are still not yet back to pre-crisis levels. Producers are expecting a strong financial finish to the year although volumes will have come off a first-half peak and output will have slowed to match possibly a more sustainable level of demand growth.
Evonik, the world’s largest specialties maker, said on Monday that it expects record chemicals earnings this year following a nine-month period in which earnings before interest and tax (EBIT) climbed to €1.40bn ($1.89bn) from €710m. The company makes products for sectors as diverse as healthcare and industrial materials.
Evonik said the increase after nine months was due to a “significant rise in volumes, higher capacity utilisation and improved margins”.
Chemicals sales were up 31% at €9.59bn. Volumes for the period were 18% higher and prices were up 10% as the segment's businesses passed through higher raw-material costs.
“All business units increased their earnings considerably year on year,” Evonik said.
Group wide (Evonik has electricity-distribution and real-estate businesses), fourth-quarter sales are expected to be up by 20% year on year - the third-quarter increase was 24%.
The results of the Germany-based company are reflecting stronger domestic-economic and industrial growth as well as growth in the important emerging markets.
Industrial chemicals and the group’s performance products led the way while vinyls lagged. Group sales were up 41% year on year, and demand was strong in
The company is confident of a strong finish to the year, and it expects to produce an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 12.5% for 2010. That expected margin is above both the 12% target set at the time of its spin-off from Total and the best previous annual margin high of 9.1% set in 2007.
Rubber chemicals, plastics and fine chemicals producer LANXESS achieved an EBITDA margin of 13.2% in the third quarter and a margin of 14.1% after nine months - largely on the back of growth in the BRIC (
LANXESS pushed sales volumes higher compared with the year earlier period across all of its business segments, with prices up generally.
Performance polymers sales were up by more than 50% with higher raw-material prices pushed down the chain.
The company appears confident of a strong finish to the year and a more sustainable economic recovery globally. Its full-year guidance is for EBITDA of around €900m, well above the profits earned in 2008 and 2009.
It is the sustainability question, however, that is creating some uncertainty and, certainly, pointing to slower growth.
"The chemical industry has experienced a breathtaking recovery process and is now close to its pre-crisis level,” president (and Evonik CEO) Klaus Engel said in the VCI’s latest economics report. “However, the third quarter shows that this catching-up process is losing in speed.
“Recovery is slower in the global economy, and competition is becoming even more intensive in chemical markets worldwide. Further growth for
The recovery has been strong and at times may have appeared to have been spectacular, but it has run out of steam. The VCI notes that chemicals capacity utilisation in
“But companies are aware that recovery will slow down significantly over the next months,” it says. “The third quarter has already shown that further growth cannot be taken for granted.”
($1 = €0.74)
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