Edited from “Chairman's message”, “outlook” and “Arch Chemicals reports second quarter 2009 earnings and revises full-year 2009 earnings guidance
Arch Chemicals will continue to move forward “aggressively on many fronts” to capitalise on solid growth opportunities, to improve its operating efficiency, to expand its global presence and to sharpen its business portfolio's focus on its core Biocides businesses. 
The company has the following strategic initiatives:
- organic growth;
- improving operating efficiency through aggressive cost reductions;
- optimising its portfolio of businesses; and
- strategic acquisitions and alliances.
Outlook
The company has revised its earnings forecast for the full-year 2009 due to lower demand principally due to unseasonal weather patterns in North America as well as decreased demand for biocides used in industrial applications and for performance urethanes products.
The unseasonal weather patterns in the second quarter of 2009 are to said to have “adversely impacted” demand for the company’s HTH water products, principally in the northeast and midwest US and in Canada, and more than offset the favourable performance from this business in the first quarter of 2009.
In addition, Arch Chemicals expects further weakness for biocides used in marine paints, metalworking fluids and plastics, principally attributable to the global recession, and has adjusted its production in alignment with the lower demand.
Performance urethanes operating results are also forecast to be lower than the company’s previous guidance due to lower demand as improved pricing in the second half is expected to fully offset the significant increase in propylene raw material costs.
These factors are expected to be partially offset by lower corporate unallocated expenses, interest expense and income tax expense compared to the company’s previous guidance. Earnings per share for the full-year 2009 are now expected to be in the $1.60 to $1.80/share range compared to the company’s earlier guidance of $1.85 to $2.05.
Full-year sales are now expected to be approximately 5% to 7% lower than 2008, as the contribution from the acquisition of Advantis and higher pricing should be more than offset by lower volumes.
Arch Chemicals continues to expect depreciation and amortisation to be approximately $50m and now expects capital spending to be in the $30 to $35m range. The effective tax rate is estimated to be in the 34% to 35% range.
“Our previous forecast expected a favourable performance from HTH water products would offset lower-than-expected results from the industrial biocides, wood protection and industrial coatings businesses. However, unseasonal weather patterns in several of our major markets undermined our opportunity to offset the shortfall in our other businesses,” says chairman, chief executive officer and president, Michael Campbell.
“In addition, demand for our biocides used in industrial applications has been revised downward, a direct result of the global recession,” continues Campbell.
“Our relentless commitment to improve operating margins by raising prices wherever possible, aggressively reducing costs, optimising our portfolio and maximising cash generation will sustain Arch through these challenging times, and are the drivers of our long-term profitable growth,” concludes Campbell.
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Financial highlights: Arch Chemicals, year ended 31 December
|
|
2008 |
2007 |
2006 |
2005 |
2004 |
|
Sales ($ m) |
1,492 |
1,488 |
1,403 |
1,271 |
1,099 |
|
Net Profit ($ m) |
37 |
35 |
14 |
41 |
20 |
|
R&D ($ m) |
22 |
20 |
18 |
21 |
15 |
|
Total Assets ($ m) |
1,232 |
1,188 |
1,150 |
1,069 |
1,100 |
|
Diluted earnings per share ($) |
1.49 |
1.43 |
0.58 |
1.70 |
0.84 |
|
Number of Employees |
3,000 |
2,670 |
3,000 |
2,725 |
-- |
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Arch Chemicals
Company Structure
Arch Chemicals is a biocides company and is split into two business segments: Treatment Products and Performance Products. Arch Chemicals was spun off from its parent, Olin Corporation, in February 1999.
More about Arch Chemicals Structure
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