Financial turmoil may hit consumer confidence – Momentive CEO

12 August 2011 16:59  [Source: ICIS news]

HOUSTON (ICIS)--The US and eurozone debt crises, as well as China’s financial policies, could hurt consumer and industrial confidence in the remainder of the year, the CEO of US-based Momentive Specialty Chemicals said on Friday.

“Given the political paralysis we have seen in the US, relative to dealing with debt issues, budgets issues, given the bond issues that we see in Europe, and given the interest rate strategy that China is taking to control inflation, we certainly believe there is a potential that this could impact consumer and industrial confidence,” Craig Morrison said.

With those three factors, there “certainly is the potential” for “a little bit of a more turbulent period” in the second half of the year, Morrison told analysts during the company’s second-quarter results conference call.

He added that the crises developed rather rapidly. After the 2011 first quarter, industry participants “were feeling very good,” and even two weeks ago companies had a more positive outlook, Morrison said.

As for raw materials, Momentive expects prices to stabilise for the remainder of 2011, after continued, strong year-on-year increase in the second quarter, chief financial officer Bill Carter said.

Raw-material price developments in the second half of the year would depend “on exactly what shape economic growth takes”, Carter added.

Momentive saw year-on-year increases in second-quarter costs of 15% for phenol, 23% for methanol, 37% for urea, and 33% for propylene.

The company managed to offset the rising raw-material costs by increasing its product selling prices, the executives said.

They would not comment on press reports speculating that Momentive may be planning to sell its forest products business, and they declined to comment on timelines for a possible initial public offering (IPO).

Momentive Specialty Chemicals, along with sister company Momentive Performance Materials, is controlled by private equity company Apollo Global Management.

For more on Momentive Specialty Chemicals and other producers, visit ICIS company intelligence
Read Paul Hodges’ Chemicals and the Economy Blog

By: Stefan Baumgarten
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