Q1 results show the outlook darkening

A year ago, the blog’s quarterly review of company results revealed mixed views on the outlook. Dow were expecting “global growth will gain momentum”, whilst Unilever warned the “external environment remains difficult”. But today, much of the optimism has disappeared and several companies including Dow are now focusing on cost-reduction measures.

There are still some bright spots, with Bayer reporting selling price increases for high-tech materials and Eastman achieving increased sales across its business. The US gained major benefit from relatively cheap shale gas, which provided important support for demand as well as production costs. SEA also remains positive, with Thailand’s PTT and Siam Cement optimistic.

But Europe provided major challenges for most companies, whilst China also failed to live up to expectations. Most see this as only a temporary setback and believe both regions will recover in due course. But some share the blog’s viewpoint: Honeywell expect no GDP growth in Europe for the next 3 years, whilst Valspar see little sign of any 2013 recovery in China.

Scenario analysis, factoring in the chances of much weaker growth than the consensus, now seems the prudent course of action:

Akzo Nobel. “The economic environment remains challenging and we do not expect an early improvement in the trends that we see in our businesses”
Arkema. “Macroeconomic conditions, particularly in Europe, remain challenging”
Ashland. “Softer demand for many of its divisions”
BASF. “Market environment remains volatile”
BP. “Continued difficult margin environment, which also led us to reduce our production particularly in Asia”
Bayer. “Overall increase in selling prices for our high-tech materials compensated for a drop in volumes in Europe and North America”
Borealis. “Further optimise its European operations in order to be sustainably profitable.”
Celanese. “Continued weakness in its acetyls division”
Clariant. “Persisting soft macroeconomic environment, characterized by high volatility”
Croda. “Strong sales uplift and favourable commodity prices”
Dow. “Aggressively managing our businesses and driving near-term execution measures”
DSM. “A challenging macro-economic environment”
DuPont. “Record operating earnings in agricultural segment offset declining earnings in performance chemicals”
Eastman. “Increased sales in most of the company’s five segments”
Evonik. “Expect a recovery in the global economy in H2″
ExxonMobil. “Higher margins, mainly in commodities”
Henkel. “A challenging market environment”
Honeywell. “Expects no GDP growth in Europe for the next 3 years”
Huntsman. “Second consecutive loss-making quarter, on the back of lower sales volumes
INEOS, “N American markets continued to show a firmer demand trend than Europe and Asia”
Kemira. “Efficiency programme will see closure of 11 manufacturing sites, 2 production plants”
Lanxess. “Not immune to a sharp drop in demand, but we are responding to it proactively”
LyondellBasell. “Global macroeconomic outlook continues to be uncertain”
Nova. “Increased margins in olefins/polyolefins business”
OMV. ” Modest economic growth in the key markets anticipated to weigh on profitability”
Occidental. “Higher ethylene costs and increased competitive activity”
Odfjell. “Represents the shipping company’s fifth consecutive loss-making quarter”
PPG. “Notable demand divergence among the major regional economies”
PTT. “Sales and margins improved”
Petkim. “Improved margins on the back of declining naphtha feedstock prices”
PetroChina. “Continued weakness in the chemical markets”
PKN Orlen. “Improving petrochemical margins year on year”
Praxair. “Expects base volumes to grow modestly given uncertainty in the macroeconomic environment”
Repsol. “Improved international outlook and higher margins”
SABIC. “Lower production due to planned maintenance”
Shell. “Despite lower sales volumes, realised margins improved”
Sherwin Williams. “Expects sales to increase by 5%-9%”
Siam Cement. “Higher chemical margins and production volumes”
Sinopec. “Weak demand and declining product prices”
Solvay. “Europe’s economic slowdown weighed on demand and trading conditions impacting all of our activities in the region”
Unilever. “Continuing macroeconomic headwinds”
Unipetrol. “Strength in margins helped to compensate for weak demand for polymers”
Valspar. “Housing and manufacturing growth in China looks to be “weakish” for 2013″
Versalis. “Cost efficiencies and optimisation measures, as well as slightly firmer pricing”
Wacker. “Solar-silicon prices remain a major challenge”
Westlake. “Globally advantaged energy and feedstock position resulting from North American shale gas and oil production”
Yara. “Increased competition from China and higher energy costs”

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. 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.

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