canadian chemical recovery continues
TRANSCRIPT
International
Canadian chemical recovery continues Combined earnings for first
nine months for four major
chemical firms rose 173%;
profit margins averaged 6%
compared to 2.7% in 1978
The earnings recovery that began about a year ago for the Canadian chemical industry continues apace. All of Canada's four largest publicly reporting chemical companies— Canadian Industries Ltd., Celanese Canada, Du Pont Canada, and Union Carbide Canada—could boast of substantially improved sales and greatly improved earnings in both the third quarter and the first nine months of 1979.
A year ago, the four companies, even though they were significantly better off than in 1977, still weren't making much money. Profit margins for the third quarter of 1978 averaged a paltry 2.2%. In contrast, the average return on sales in this year's third quarter was 7.5%.
Celanese and Du Pont, both big in fibers, are now turning profits on those items as well as on chemicals. Carbide, traditionally the most profitable of the four, was in the doldrums last year. But in the third quarter its earnings more than quintupled (compared to last year's period) and its profit margin rebounded to 11%. CIL, which for much of the year was affected by strikes at its own plants and elsewhere, more than doubled its earnings in the third quarter.
Combined sales for the four firms amounted to $701.1 million in the
Third-quarter earnings are up more than 300% % year-to-year change3
360
320
280
240
200
160
120
80
40
0
-40
-80
• I 1 1 1 III
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HI II 1976 1977 1978 1979
a After-tax earnings of four largest publicly reporting Canadian chemical companies—Canadian Industries Ltd., Celanese Canada, Du Pont Canada, and Union Carbide Canada.
third quarter, a 30% increase from last year's period. Net income for the four totaled $52.3 million, a gain of 340%. For the first nine months of 1979, combined sales reached $2.06 billion, up 26% from the like period last year, and earnings rose 173% to $123.2 million.
CIL third-quarter sales reached $207.0 million, up 18% from the third quarter of 1978. Earnings for the period came to $8.9 million, a 103% increase. Sales for the first nine months of 1979 were $660.6 million, 17% higher than in the corresponding pe
riod of 1978. Net income for the nine months amounted to $29.3 million, up 28%.
The company says that the major improvement in third-quarter net income reflected sales gains in agricultural and industrial chemicals, explosives, and plastics. It notes that its explosives business was depressed in third-quarter 1978 by strikes in iron mines and lower activity in the Canadian mining and construction industries.
Celanese Canada's third-quarter sales amounted to $79.6 million, a 19% increase over last year's period. Earnings rose 152%, to $4.7 million. In the first nine months, sales reached $254.6 million, up 23%. Net income in the period was $16.0 million, a 358% increase. Sales and earnings for both the three- and nine-month periods were the highest ever recorded, Celanese points out.
At Du Pont Canada, third-quarter sales of $229.2 million represented a 40% improvement over last year's third quarter. Net income for the period jumped 852% (compared to third-quarter 1978) to $18.4 million. In the first nine months, sales totaled $646.6 million, a 36% increase; earnings reached $40.5 million, up 386%. Exports of manufactured products rose 57% during the nine-month period.
According to Du Pont, the strong demand already evident during the first six months continued, particularly for polyethylene resins, poly-olefin fabrics, and nylons. Cost control, higher volume, and higher selling prices all contributed to the improved profit picture, Du Pont president J. E. Newall says.
Union Carbide Canada's third-quarter sales also ran 40% ahead of last year's levels, totaling $185.3 million. Net income for the period came to $20.3 million, a 432% increase. For the nine-month period, sales amounted to $494.3 million (up 33%) and earnings to $37.4 million (up 256%).
Plastics and chemicals recorded the strongest gains, the company says. Carbon products also were significantly ahead, as greater electric furnace steel output raised demand for graphite electrodes.
Ward Worthy, C&EN Chicago
Profitability continues to register gains
$ Millions (Canadian)
Celanese Industries Ltd. Celanese Canada Du Pont Canada Union Carbide Canada
TOTAL
Net sales 1979
$660.6 254.6 646.6 494.3
$2056.1
a Net income as percentage of sales.
NINE-MONTHS 1979 Change Net
from income 1978 1979
17% $29.3 23 16.0 36 40.5 33 37.4 26% $123.2
Change from 1978
28% 358 386 256 173%
Profit 1979
4.4% 6.3 6.3 7.6 6.0%
margin8
1978
4.0% 1.9 1.7 2.8 2.7%
22 C&EN Nov. 19, 1979