Q3 results show companies cautious over the outlook

6 months ago, when reporting Q1 results, the blog strongly disagreed with the rosy outlook being offered by most analysts. It warned then that:

“The history of the past 40 years shows high oil prices have always led to:

• An initial boom in volumes/margin as buyers rush to secure supplies
• Then a period of severe destocking, once oil prices stabilise

“Sadly, many analysts have only focused on the immediate short-term benefits. Some even upgraded their forecasts, on the assumption that good times are here to stay. The blog hopes they may prove correct, and that ‘this time is different’, but would not invest its own money on this basis.”Today’s survey of Q3 results shows markets have since slowed considerably. Companies operating in the Middle East and China still expect their growth to continue, but this is due to the different context in which they operate.

The level of caution is also rising. Those companies who reported at the end of October were relatively more confident than those reporting in recent days. The EU’s problems are a particular concern, as it represents 26% of the global economy.

Air Products. “Near-term economic outlook is for continued slow growth, and is clouded by global economic and policy uncertainties”.
Akzo Nobel. “”The crisis has also taken far longer and hit far worse than many of us feared.”
BASF. “”We remain cautious … as economic growth is likely to slow further. In particular, credit restrictions in China, as well as the debt crises in Europe and the US will adversely impact economic growth.”
BP. “Strong refining feedstock optimisation in the US due to accessing WTI-priced crude grades”.
Bayer. “Earnings diminished by higher energy and raw material costs”.
Borealis. “We are planning with a low-growth scenario for next year”.
Braskem. “Oil market volatility and reduced demand for petrochemicals continue to affect the scenario”.
Celanese. “Higher pricing across all operating segments and favourable currency impacts”.
Clariant. Expect “further softening demand, volatile currencies and stable raw material costs”.
ConocoPhillips. “Earnings rose 49% because of higher ethylene margins”.
Croda. “Sales growth and margin improvement in our core businesses”.
Dow. “We expect high-cost crackers in Asia and western Europe to begin to feel the margin compression in the very near term”.Dow Corning. “Higher prices for materials and energy exerted downward pressure on product margins”.
DSM. “Experienced weakening in the electronics and electrical markets and in the depressed building and construction markets”.
DuPont. “Our own results for the third quarter indicate a very mixed bag”
Eastman. “Volume to fall as a result of normal market seasonality and customer inventory destocking”.
ExxonMobil. “The upside from stronger margins was offset by reduced volumes”.
Huntsman. “Many of our larger product lines are still quite some distance from their peak earnings potential”.
INEOS. “Global economic and political turbulence has created hesitancy in many markets, leading to a softening in demand”.
Kemira. “Successful in offsetting higher costs with sales prices”.
Lanxess. “Strong demand for the firm’s synthetic rubbers and high-tech plastics”.
LyondellBasell. “Global economic uncertainty was leading to raw material price and profit margin volatility”.
Methanex. “Methanol demand continues to be healthy and the longer-term outlook is excellent”.
Occidental. Q4 to be impacted by “customers’ efforts to minimise inventories and a slowdown in exports”.
Olin. Lower US chloralkali demand “a direct result of lower worldwide demand driven by macroeconomic woes”.
Orlen. “Difficult macro environment”.
Petrochina. “Will maintain a stable, balanced, efficient, controlled and coordinated operation”.
Polimeri Europa. “Substantial decrease in demand because of expectations of a reduction in prices of petrochemical commodities on the marketplace”.
Praxair. “Solid growth in all geographies with the exception of Europe”.
PTT. “Increase in average selling price and sales volume “.
Reliance. “”All our manufacturing facilities operated at record levels.”
Rockwood. “”We are not optimistic about the US housing market for 2012 or 2013,”
SABIC. Net income increased by 1% versus Q2: “the company had maintained its competitive position and continued to grow”.
Shell. “Chemicals sales volumes fell by 9% year on year”.
Sherwin-Williams. “Operating segments continue to control costs and implement price increases in an effort to keep pace with rising raw material costs”.
Siam Cement. “Earnings declined as feedstock costs spiked”.
Sinopec. “Production of ethylene increased by 11.3% year on year”.
Solutia. “Slightly higher volumes are expected to be substantially offset by the translation impact from a stronger US dollar”.
Solvay. “Higher sales prices compensated for the rise in energy costs”.
TOTAL. “Environment remained globally favourable for specialty chemicals, but deteriorated for petrochemicals due to softer demand,”
Westlake. “Our natural gas-based ethylene production continues to have a cost advantage over naphtha-based feedstock”.
Yule Catto. “Current softer demand is attributable to destocking, along with some end-market weakness”.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

One Response to Q3 results show companies cautious over the outlook

  1. Tony Shaw 10 March, 2012 at 10:08 pm #

    Couldn’t agree more, well written article.

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