Europe refinery closures hurt US WR Grace catalyst sales

25 July 2012 19:28  [Source: ICIS news]

HOUSTON (ICIS)--WR Grace expects to lose more than $50m (€42m) in catalysts sales this year because of the many European refinery closures, the US-based catalysts and specialty chemicals producer said on Wednesday.

In the second-quarter ended 30 June, Grace lost about $12m in refinery catalysts sales from the closures, it said.

Grace’s fluid catalytic cracking (FCC) sales volumes increased in North America and the emerging regions in the second quarter, but this was not enough to offset the decline in Europe, CEO Fred Festa and chief financial officer Hudson La Force told analysts during the company’s earnings call.

However, Grace expects to fully offset the lost European sales as the industry shifts to emerging regions with fast growth rates for transportation fuels, Festa said.

Grace, for its part, anticipated this shift by building up FCC capacities in Abu Dhabi and China, he said.

“As the industry works through this regional shift, we will see some short-term impact on sales, but we are confident in our ability to maintain our industry leadership position,” he added.

Grace’s second-quarter sales in its catalysts technologies segment were down 1.9% to $328.6m. The segment includes Grace's FCC, polyolefins and chemical catalysts.

The company’s total second-quarter sales from its three core segments – catalysts technologies, materials technologies and construction chemicals – were flat at $826.7m

Grace’s overall operating environment has turned out to be more challenging than the company initially expected, mainly because of the uncertainty in Europe, Festa said.

Festa also said that WR Grace has decided to seek to emerge from bankruptcy this year, despite a number of legal appeals against the company’s reorganisation plan.

Grace has begun discussions with parties involved in the legal proceedings to reach an agreement that could see Grace emerge from bankruptcy even with the appeals outstanding, he said

“We believe that the risk that any of these appeals will succeed is remote, and we believe that the legal and economic benefits of emerging with these appeals outstanding are greater than the benefits of remaining under [US bankruptcy code] chapter 11 protection,” he said.

Grace had filed for bankruptcy protection in 2001 because of asbestos-related lawsuits.

Additional reporting by Franco Capaldo

($1 = €0.83)

By: Stefan Baumgarten
+1 713 525 2653

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