Chemtura sees raw material price decline as short-lived – CEO

28 February 2012 17:30  [Source: ICIS news]

HOUSTON (ICIS)--Chemtura believes that the decline in raw material costs from which it benefited in the 2011 fourth quarter will be short-lived, the CEO of the US-based specialty chemicals firm said on Tuesday.

CEO Craig Rogerson said that 2011 fourth-quarter margins in Chemtura’s industrial businesses improved because of lower raw material costs compared with the third quarter, as well as Chemtura’s own product price increases.

“We saw, for the first time, some decrease in general raw material costs,” Rogerson told analysts during the company’s fourth-quarter results conference call.

However, Rogerson said that Chemtura is already seeing signs that raw material costs will go up again.

Many of Chemtura’s petrochemical raw materials are more oil-based than natural-gas based, which means that as oil prices go up the company will see upward pressure on those costs, he said.

He pointed in particular to benzene-related raw materials, which will likely be affected early by any raw material cost increase.

Chemtura, for its part, will need to ensure that it manages to offset those expected increases in raw material costs through higher product prices, he said.

The company built up selected raw material inventories to take advantage of the recent decline, but it had to balance those initiatives against the need to carefully manage cash flows and working capital, he added.

Chemtura’s industrial performance products reported a 2011 fourth-quarter operating income margin of 12%, compared with 10% in the same period a year ago, and its industrial engineered products businesses reported a margin of 15%, compared with 9% in the year-earlier period.

Industrial performance products and industrial engineered products accounted together for more than 70% of Chemtura’s 2011 sales of $3.03bn (€2.27bn).

($1 = €0.75)

By: Stefan Baumgarten
+1 713 525 2653

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