Deutsche Bank lowers earnings estimates for US chems

16 September 2011 17:19  [Source: ICIS news]

HOUSTON (ICIS)--Deutsche Bank has lowered its earnings estimates for 20 chemical companies by an average of 6% as a result of the beleaguered global economy, the investment firm said on Friday.

While Deutsche Bank does not expect the world economy to crash like it did in 2008, there are emerging signs of a significant slowdown.

A sluggish US economy, Europe’s debt woes and inflation pressures in China have caused widespread uncertainty, Deutsche Bank said.

“This week's earnings warnings from Solutia, along with last week’s lowered guidance from Spartech and a late August warning from OMNOVA are growing evidence of the impact of the decelerating global economy on chemical earnings,” Deutsche Bank said.

Solutia produces polyvinyl butyral (PVB) interlayers for safety glass; Spartech is a compounder; and OMNOVA produces synthetic rubber for carpet backing as well as paper and paperboard coatings.

“While we are also reducing our price targets on the 20 companies, we are not changing any ratings, as these stocks, in our view, are already pricing in cuts to [2012 earnings estimates] of 10–20% [versus] our reductions of 5–10%,” the firm added.

Deutsche Bank said over a dozen US chemical companies still report positive growth, especially in the agriculture, automotive, acetyls and packaging segments.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Bobbie Clark
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