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Company Intelligence: Occidental Chemical

Occidental Chemical | Strategy and Financial Highlights Information from ICIS

 

Occidental’s key focus is delivering “performance, growth and value” in which it states that it is positioned for “consistent profitability”.

 

“Fortunately, Occidental’s strategy of strict financial discipline, characterised by astute capital allocation, anticipatory risk management and prudent cash management, positions the company for consistent profitability. In times of economic expansion or downturn, Occidental delivers performance, growth and value,” says chairman and chief executive officer, Ray Irani.

 

Occidental says that it will continue with its strategic initiatives to capitalise on opportunities to strengthen its position in key locations. “We intend to continue acquiring desirable assets as they become available at more attractive prices. We strive to maximise return on investment (ROI) while managing risks and minimising leverage. We aim to be a low-cost producer, keeping a constant eye on operating efficiency,” says Irani.

 

Occidental will focus on the following strategies:

 

(1) Focus on large, long-lived oil and gas assets with long-term growth potential.

 

(2) Maintain financial discipline and a strong balance sheet.

 

(3) Manage the chemical segment to provide cash in excess of normal capital expenditure.

 

(4) Manage the midstream and marketing segment to generate returns in excess of Occidental’s cost of capital.

 

Occidental states that maintaining its financial discipline means investing capital in projects that management expects will generate above-cost-of-capital returns through their life cycle.

 

Occidental further states that its chemicals business (OxyChem) is not managed with a growth strategy. The company says that capital is used to operate the chemical business in a “safe and environmentally sound way”, to sustain production capacity and to focus on projects designed to improve the “competitiveness of its assets”.

 

Occidental says that assets acquisitions may be pursued when they are expected to enhance the existing core chlor-alkali and polyvinyl chloride (PVC) businesses. Historically, the company says that the chemicals segment has generated cash flow exceeding its normal capital expenditure requirements.

 

In its chemical strategy, OxyChem says its key focus is to be a low-cost producer in order to maximise its cash flow generation. OxyChem concentrates on the chlorvinyls chain beginning with chlorine, which is co-produced with caustic soda, both of which are marketed to third parties.

 

In addition, chlorine together with ethylene, is converted through a series of intermediate products into PVC. OxyChem’s says its focus on chlorovinyls permits it to maximise the benefits of integration and allows it to take advantage of economies of scale.

 

Download the The ICIS Top 100 Chemical Companies listing here

 

Financial highlights: Occidental, year ended 31 December

 

 

2010

 2009

 2008

 2007

 2006

Sales ($ m)

19,045

14,814

24,217

18,784

17,175

Net Profit ($ m)

4,530

2,915

6,857

5,400

4,191

Total Assets ($ m)

--

44,229

41,537

 36,519

32,431

Diluted earnings per share ($)

5.56

3.58

8.35

 6.44

4.87 

Number of Employees

 

10,100

10,400

 9,700

8,886

 

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Occidental Chemical Company Structure

Occidental Chemical Corporation (OxyChem), a wholly owned subsidiary of Occidental Petroleum Corp, (Oxy), is a leading North American manufacturer of polyvinyl chloride (PVC) resins, chlorine and caustic soda – key building blocks for a variety of products such as plastics, pharmaceuticals and water treatment chemicals.
More about Occidental Chemical Structure

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