Moody’s upgrades US Albemarle on strong operating performance

07 December 2010 18:41  [Source: ICIS news]

TORONTO (ICIS)--Moody’s has upgraded its ratings for US chemicals and catalysts producer Albemarle on a strong 2010 operating performance and good prospects in the coming 12-18 months, the ratings firm said on Tuesday.

Moody’s also said that Baton Rouge, Louisiana-based Albemarle had sufficient cash for smaller acquisitions without its hurting ratings.

Moody’s raised its debt ratings for Albemarle to Baa1 from Baa2, it said. The ratings affect some $675m (€506m) in Albemarle securities.

Albemarle had substantially improved its operating performance in its three core segments - polymer solutions, catalysts and fine chemicals - this year as volumes and pricing supported revenue growth as well as higher margins, Moody’s said.

The company’s margins had benefited from strong pricing power for its products, allowing the firm to pass through higher raw material costs, the agency said.

“Profits are expected to grow further in 2011 due to the strong underlying market trends for [Albemarle's] products and services, capacity expansions in Asia and the Middle East and debottlenecking of bromine production facilities in the US and Jordan,” Moody’s said.

Also, near-term tight supply-demand dynamics in the bromine market were expected to support earnings growth, the agency added.

Risks to Albemarle’s ratings included its small size and the expectation that management may pursue sizable acquisitions to support future growth, the agency said.

However, Albemarle had “elevated cash balances” that could allow it to see through “limited acquisitions” without negative effects on ratings, Moody’s added.

Moody’s also noted that Albemarle’s management was conducting an internal strategic assessment of the company’s core capabilities.

“We would expect this assessment to provide greater clarity on the firm's acquisition strategy, including the size and type of potential targets, and management's financial priorities in the event of an acquisition,” Moody’s said.

($1 = €0.75)

For more on Albemarle or other producers visit ICIS company intelligence
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By: Stefan Baumgarten
+1 713 525 2653

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