Q4 results show companies still waiting for something to turn up

Chemical companies

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flat arrowWe all live in hope.  That seems to be the underlying message from the blog’s quarterly survey of company results.

Nothing has changed since last quarter or indeed Q2, when BASF noted that “achieving our earnings target is significantly more challenging today than we had expected”.

Yet this latest quarter was, of course, supposed to be the one when everything would suddenly come right.  But once again we are disappointed.

There were some bright spots, particularly amongst those US companies profiting from the shale gas feedstock cost advantage.  And gas companies remain insulated from the wider economy by their long-term contracts.

But beyond these beacons of light, the mood has become quite cautious.  Those close to the end-consumer, such as Akzo Nobel report that the environment remains fragile.   In Japan, Asahi Kasei are remarkably downbeat about the outlook.  Abenomics, which was supposed to reverse Japan’s demographic decline, is clearly not yet delivering on its promises.  In China, Bayer report that the new government’s polices are already hitting earnings.  And whilst BASF remain hopeful, expecting the world economy to improve slightly in 2014, even their optimism is tempered by concern over rising volatility.

The great author Charles Dickens was the first to describe this state of mind in his classic novel ‘David Copperfield’.  It features Mr Micawber, modelled on Dickens’ own father, whose motto in life was that “something will turn up”.

However, nothing ever did turn up.  Instead, Micawber finally recognised reality and decided to leave Victorian England for Australia, where he then successfully started a new life.

This is what we all have to learn to do.  The global economy is not going to “turn up” and return to the SuperCycle.   Demographics drive the economy, and today’s ageing populations are thus taking us in a new direction.  This is the message of the latest episode of disappointment charted by Q4 results.

Air Products. “Continued to execute on our strong backlog, bringing on major new plants in China”
Air Liquide. “Positive trend observed since the beginning of the year, driven by our Healthcare activity”
Akzo Nobel. “The economic environment remains fragile and foreign currencies volatile”
Arkema. “Remains bullish on economic prospects for its key markets in North America and Asia”
Asahi Kasei. “Contracting demand in Japan and increasingly severe competition from low-priced imports”
Axiall. “Innovative new products and operated our plants at higher-than-industry rates”
BASF. “World economy is expected to grow slightly faster in 2014 than in 2013, despite continuing volatility”
BP. “Expects the fuel and petrochemical environments to remain challenging”
Bayer. “Reduced emphasis on economic expansion since the formation of China’s new government had led to a slowdown for chemicals earnings”
Borealis. “Continuing difficult market environment in Europe”
Celanese. “Earnings rise on lower expenses, asset disposition”
Chemtura. “Made significant progress in shaping our portfolio”
Chevron Phillips. “Focusing investments on higher growth and higher margin products”
Croda. “Global trends are unpredictable and our forward visibility remains limited”
Dow. “Global growth remains tentative, continuing to drive business uncertainty”
Dow Corning. “Year characterised by significant oversupply and pricing pressure in our industry”
DSM. “Focus will continue on the operational performance of our businesses”
DuPont. “Improvement was driven by higher volumes, new innovative products and productivity gains”
Eastman. “Challenges from increasing raw material and energy costs, particularly for propane, and continued economic uncertainty”
EQUATE. “Strong global demand for petrochemical products”
ExxonMobil. “The global chemical industry remains in a typical cyclical pattern, with the US at the top and Europe and Asia-Pacific at the bottom of the cycle”
Ferro. “Lower phthalate sales from its polymer additives segment”
Honeywell. “Unfavourable pricing in fluorine products and lower shipments in the aromatics”
Huntsman. “Aggressive self-help measures have re-focused our efforts on key markets and lowered our costs”
INEOS. “From 2010-2013, our profits in Europe have more than halved while profits in America have tripled”
Kemira. “Divestments, realignments and cost-reductions are focused on repositioning the company”
Kronos. “Lower titanium dioxide prices and the cost of settling a labour dispute”
LG Chem. “PVC margins were squeezed by the influx of offshore supplies and slow demand from emerging markets”
LyondellBasell. “We believe olefins in North America will continue to benefit from strong margins created by cost-advantaged NGLs”
Methanex. “Healthy methanol demand and stronger pricing”
MOL. “Integrated margin became weaker, driving results downwards”
Nova. “Profits primarily driven by higher polyethylene margins”
OMV. “Naphtha spreads increased somewhat”
Olin. “Chlor-alkali returns likely to be down from Q1 2014 due to lower ECU (electro-chemical unit) netbacks”
OxyChem. “New chlor-alkali capacity resulted in a significant increase in competitive activity in Q4 causing price pressure”
PKN Orlen. “Weighed down by unplanned plant shutdowns”
PPG. “Stabilising regional demand in Europe, where coatings volumes were flat in Q$ following 9 consecutive quarters of decline”
PetroLogistics. “Propylene prices may keep falling due to demand destruction”
Petro Rabigh. “Decreased petrochemical sales quantity due to utilities supplier blackout event in September had a negative impact”
Praxair. “Higher energy, metals, chemicals and manufacturing markets”
SABIC. “For 2013, net profit was up by 1.82% due to lower cost of sales and financial charges”
Shell. “Improved industry conditions in the US and Asia”
Sherwin-Williams. “Higher architectural paint sales volumes”
Sipchem. “Higher product prices, especially methanol”
Solvay. “Product prices fell in line with lower raw material costs”
Styrolution. “Good polystyrene margins and strong performance in the styrene monomer segment”
Unipetrol. “Profitability weakened due to a lower olefin margin”
Vopak. “For the first time in ten years, Vopak did not grow its earnings”
WR Grace. “Volatile moves in emerging nations’ currencies could have a major effect”
Westlake. “Higher PE and PVC resin sales prices as well as lower ethane costs”
Williams. “Continued decline in NGL margins and the significant and tragic Geismar inciden”
Yansab. “Forced shutdown of its production complex”

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