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Released October 28, 2015 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--A strengthening U.S. dollar weighed on the results for two global chemical giants, E.I. du Pont de Nemours and Company (NYSE:DD) (Du Pont) and Huntsman Corporation (NYSE:HUN) (The Woodlands, Texas), which also were hit by lower selling prices for their biggest products. Du Pont took a hit from continued weakness in the agricultural market and the ripple effects of last year's catastrophe at a Texas chemicals plant, and both companies plan to dramatically reduce capital spending to address their problems. Industrial Info is tracking $792.62 million in active projects involving Du Pont and $1.26 billion in active projects involving Huntsman.
Among the Du Pont projects tracked by Industrial Info are two very different projects on the Eastern seaboard: the $30 million expansion of a polyester plant in Kinston, North Carolina, and the $35 million expansion of a soybean research facility in Newark, Delaware. In Kinston, the company plans to boost production, warehouse capacity and distribution capability by adding production-line equipment, buildings, infrastructure and rail spur loading/unloading capacity. In Newark, Du Pont is constructing a 134,000-square-foot building, two greenhouses, and three high-tech, 60,000-gallon water collection units to expand research in soybeans and other agricultural products.
Among the Huntsman projects tracked by Industrial Info is the proposed, $60 million debottlenecking and expansion of a chemicals plant in Geismar, Louisiana. Rubicon LLC, a joint venture between Huntsman and Chemtura (NYSE:CHMT) (Philadelphia, Pennsylvania), plans to boost capacity of an MDI unit for pures and variants by an undisclosed quantity. The project is set to kick off in the first quarter of 2017, although it is still in the planning phases.
DuPont plans to cut $1.6 billion from its budget by next year, stepping up its pace from past announcements. Huntsman now pegs its capital-expenditure budget for each of the next two years at $450 million, which is a combined reduction of $150 million when compared with past guidance.
"From a [capital spending] standpoint, we've been spending around $1.5 billion a year," said Ed Breen, the interim chair and chief executive officer of Du Pont, in a company conference call. "I think that number is too high. We've pretty much zeroed in on what our numbers are going to be for 2016."
Huntsman reported net income of $55 million for the quarter, compared with $188 million in third-quarter 2014, while revenues stood at $2.64 billion, an 8.53% decrease. Lower raw materials costs sharply reduced selling prices in Huntsman's Polyurethanes segment, especially for MDI and PT/MTBE, despite increases in sales volumes. Similarly, higher sales volumes in the company's Performance Products segment, particularly for ethylene oxide intermediates, failed to offset the effects of lower selling prices due to lower raw material costs.
Huntsman's Advanced Materials and Textile Effects segments both saw revenues drop following weaker sales volumes and selling prices. Foreign currency exchange had a negative effect on all segments.
DuPont cited foreign currency as the most significant factor in its profit and revenue declines from the same period last year. The company reported net income of $235 million, a 45.73% decrease, and net sales of $4.87 billion, a 17.48% decrease from third-quarter 2014. Like Huntsman, DuPont took a hit from lower ethylene prices and volumes, which dragged down results in the Performance Materials segment. But it also was affected by weaknesses in emerging industrial markets; a challenging agricultural market, where seed volumes and demand for insect-control products both dropped; and oil and gas markets, which diminished product demand in the Safety & Protection segment.
DuPont also cited delays in military spending, which reduced sales for its Kevlar products. However, the Industrial Biosciences segment benefited from stronger demand for food, home and personal-care products, while the Electronics & Communications segment saw stronger demand for consumer electronics.
"The dollar remains strong relative to most other currencies, particularly the Brazilian real," said Nick Fakandakis, the executive vice president and chief financial officer of Du Pont, in a conference call. "The challenging [agricultural] market in Brazil was the primary driver of the 7% volume decline in the quarter, from lower seed volume and reduced demand for insect control products. However, in agriculture we're progressing well in our limited launch of Leptra corn hybrids for the upcoming Safrinha season, with an aggressive ramp up planned for our 2016 Summer season. We did see volume growth in the quarter in Industrial Biosciences on the increased demand for enzymes and biomaterials."
Du Pont is still seeing the aftershocks of the November 2014 toxic chemical leak at the company's manufacturing facility in La Porte, Texas. Four employees died following the leak. Costs associated with the facility's shutdown took about $40 million out of operating earnings for the quarter, and about $90 million year-to-date.
Huntsman executives plan to exit the titanium dioxide business "as soon as market conditions permit," either through a spin off or a total sale of the segment. The chemical is used as a pigment in various industrial applications.
"Business conditions remained challenging in the titanium dioxide market," said Peter Huntsman, the president, chief executive officer and director of Huntsman, in a conference call. "Average titanium dioxide selling prices decreased further from the second quarter. The decline was most pronounced in North America, where prices declined approximately 8% compared to the prior quarter. Prices in Europe were essentially flat."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Among the Du Pont projects tracked by Industrial Info are two very different projects on the Eastern seaboard: the $30 million expansion of a polyester plant in Kinston, North Carolina, and the $35 million expansion of a soybean research facility in Newark, Delaware. In Kinston, the company plans to boost production, warehouse capacity and distribution capability by adding production-line equipment, buildings, infrastructure and rail spur loading/unloading capacity. In Newark, Du Pont is constructing a 134,000-square-foot building, two greenhouses, and three high-tech, 60,000-gallon water collection units to expand research in soybeans and other agricultural products.
Among the Huntsman projects tracked by Industrial Info is the proposed, $60 million debottlenecking and expansion of a chemicals plant in Geismar, Louisiana. Rubicon LLC, a joint venture between Huntsman and Chemtura (NYSE:CHMT) (Philadelphia, Pennsylvania), plans to boost capacity of an MDI unit for pures and variants by an undisclosed quantity. The project is set to kick off in the first quarter of 2017, although it is still in the planning phases.
DuPont plans to cut $1.6 billion from its budget by next year, stepping up its pace from past announcements. Huntsman now pegs its capital-expenditure budget for each of the next two years at $450 million, which is a combined reduction of $150 million when compared with past guidance.
"From a [capital spending] standpoint, we've been spending around $1.5 billion a year," said Ed Breen, the interim chair and chief executive officer of Du Pont, in a company conference call. "I think that number is too high. We've pretty much zeroed in on what our numbers are going to be for 2016."
Huntsman reported net income of $55 million for the quarter, compared with $188 million in third-quarter 2014, while revenues stood at $2.64 billion, an 8.53% decrease. Lower raw materials costs sharply reduced selling prices in Huntsman's Polyurethanes segment, especially for MDI and PT/MTBE, despite increases in sales volumes. Similarly, higher sales volumes in the company's Performance Products segment, particularly for ethylene oxide intermediates, failed to offset the effects of lower selling prices due to lower raw material costs.
Huntsman's Advanced Materials and Textile Effects segments both saw revenues drop following weaker sales volumes and selling prices. Foreign currency exchange had a negative effect on all segments.
DuPont cited foreign currency as the most significant factor in its profit and revenue declines from the same period last year. The company reported net income of $235 million, a 45.73% decrease, and net sales of $4.87 billion, a 17.48% decrease from third-quarter 2014. Like Huntsman, DuPont took a hit from lower ethylene prices and volumes, which dragged down results in the Performance Materials segment. But it also was affected by weaknesses in emerging industrial markets; a challenging agricultural market, where seed volumes and demand for insect-control products both dropped; and oil and gas markets, which diminished product demand in the Safety & Protection segment.
DuPont also cited delays in military spending, which reduced sales for its Kevlar products. However, the Industrial Biosciences segment benefited from stronger demand for food, home and personal-care products, while the Electronics & Communications segment saw stronger demand for consumer electronics.
"The dollar remains strong relative to most other currencies, particularly the Brazilian real," said Nick Fakandakis, the executive vice president and chief financial officer of Du Pont, in a conference call. "The challenging [agricultural] market in Brazil was the primary driver of the 7% volume decline in the quarter, from lower seed volume and reduced demand for insect control products. However, in agriculture we're progressing well in our limited launch of Leptra corn hybrids for the upcoming Safrinha season, with an aggressive ramp up planned for our 2016 Summer season. We did see volume growth in the quarter in Industrial Biosciences on the increased demand for enzymes and biomaterials."
Du Pont is still seeing the aftershocks of the November 2014 toxic chemical leak at the company's manufacturing facility in La Porte, Texas. Four employees died following the leak. Costs associated with the facility's shutdown took about $40 million out of operating earnings for the quarter, and about $90 million year-to-date.
Huntsman executives plan to exit the titanium dioxide business "as soon as market conditions permit," either through a spin off or a total sale of the segment. The chemical is used as a pigment in various industrial applications.
"Business conditions remained challenging in the titanium dioxide market," said Peter Huntsman, the president, chief executive officer and director of Huntsman, in a conference call. "Average titanium dioxide selling prices decreased further from the second quarter. The decline was most pronounced in North America, where prices declined approximately 8% compared to the prior quarter. Prices in Europe were essentially flat."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
