US Stepan hikes 2011 prices to recoup margins lost on feedstocks

04 May 2011 21:39  [Source: ICIS news]

HOUSTON (ICIS)--Stepan is increasing selling prices across its business segments to recoup margin lost in recent months as a result of surging raw material costs, the chief financial officer of the US-based chemicals firm said on Wednesday.

“We have increased our selling prices to address rising raw material costs, and remain optimistic about our prospects for volume growth and margin improvement for the remainder of the year,” James Hurlbutt told analysts during the company’s first-quarter results conference call.

“We anticipate margin improvement in the remainder of the year, relative to the first quarter… we believe it will be a significant increase in margin,” Hurlbutt said.

The raw material price increases are the result of the global economic recovery, which is driving up global oil and commodity prices, he said.

Stepan’s total gross profit from its three core business segments fell by 3% year on year to $61.8m (€41.4m) in the 2011 first quarter, even though higher selling prices drove sales up by 25% to $422.6m, the company reported on Tuesday.

Overall gross margin in the 2011 first quarter fell to 14.6% from 18.8% in the 2010 first quarter.

In surfactants, which account for 77% of the company’s overall sales, Stepan reported a 2% year-on-year decline in first-quarter gross profits because of the high raw material costs.

In the polymer segment, which accounts for about 20% of sales, gross profit was unchanged from the 2010 first quarter, despite a 19% year-on-year increase in volumes, also a result of raw material costs cutting into margins.

Gross profit in Stepan’s specialty products segments, which accounts for about 3% of sales, fell 21% year on year.

($1 = €0.67)

For more on Stepan and other producers visit ICIS company intelligence

By: Stefan Baumgarten
+1 713 525 2653

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