US DuPont sees continued headwind from BD, benzene pricing
Stefan Baumgarten
25-Jul-2017
HOUSTON
(ICIS)–Operating margins in DuPont’s performance materials
business will likely continue to contract in the remainder of
the year, mainly due to increased prices for key raw
materials such as butadiene (BD) and benzene, DuPont’s chief
financial officer Nicholas Fanandakis told analysts during
the company’s second-quarter earnings call on
Tuesday.
The segment’s main products include engineering polymers,
packaging and industrial polymers, films and elastomers,
among others.
In the second quarter, performance materials’ operating
margins contracted by about 50 basis points year on year,
mainly due to the higher raw material prices, as well as
impacts from a planned turnaround of DuPont’s cracker at
Orange, Texas, which impacted volumes, Fanandakis said.
“Looking forward, we see those raw headwinds continue around
BD, benzene, ethane… The ethylene margins are going to see
compression because we are seeing ethylene spot pricing start
to decline somewhat as well,” he said.
“You will continue to see that margin compression in
performance materials because of the market, and the raws,”
he said.
In the second quarter, performance
materials’ operating earnings rose by 1% year on
year to $329m, primarily on volume growth and higher local
price, largely offset by the negatives from the raw
material costs and the cracker turnaround.
Increased demand for polymers in automotive markets and
increased demand for high-performance parts in semiconductor
and aerospace markets drove the higher volumes.
The segment’s sales were up 3% year on year to
$1.38bn, accounting for almost 19% of DuPont’s
total second-quarter sales.
DuPont’s performance materials is set to become part of the
materials company DowDupont expect to spin off within 18
months of closing their merger next month.
Fanandakis said that DuPont will not issue standalone second
half and full-year earnings guidance, given the expected
closing of DowDuPont. However, the merged company will
file historical pro-forma financial information after
closing, he added.
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