US chemical companies' earnings dip in late 2005; hurricanes to blame, C&EN reportsAfter posting double-digit earnings growth for eight consecutive reporting periods, combined earnings for 23 U.S. chemical companies surveyed rose by only 0.9 percent in the fourth quarter of 2005, compared to the same quarter of 2004, Chemical & Engineering News reports in the Feb. 27 issue. C&EN is the weekly newsmagazine published by the American Chemical Society, the world’s largest scientific society.
A major factor, according to the newsmagazine, was the lingering effects of the hurricanes that hit the Gulf Coast, causing plant closures, disrupting transportation and driving down demand, especially for basic organic chemicals. The after-effects of Hurricanes Rita and Katrina were so pronounced during the quarter that 16 of the 23 companies surveyed mentioned the storms in their earnings commentary, according to C&EN.
The C&EN survey showed that the 0.9 percent earnings increase brought the 2005 fourth quarter earnings total to $2.31 billion, while sales rose to $38.1 billion, an increase of 7.5 percent from the final quarter of 2004. This dropped the aggregate profit margin for the group to 6.1 percent in the final quarter of 2005, compared to 6.5 percent for the same period of 2004.
This modest increase in sales and earnings changed the complexion of what had been promising to be an extremely good year, according to C&EN. Cumulative results for the first nine months showed sales up 12.5 percent and earnings increasing 48.0 percent over the comparable period for 2004. With the addition of the fourth quarter figures for 2005, the increases were good but not as impressive. Earnings for the full year increased 28.6 percent from 2004 to $11.9 billion as sales rose 10.5 percent to $153.6 billion.
For the full C&EN survey story, go to: http://pubs.acs.org/cen/business/84/8409bus1.html
The American Chemical Society — the world’s largest scientific society — is a nonprofit organization chartered by the U.S. Congress and a global leader in providing access to chemistry-related research through its multiple databases, peer-reviewed journals and scientific conferences. Its main offices are in Washington, D.C., and Columbus, Ohio.
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