CHEMICAL & ENGINEERING

NEWS VOLUME 40, NUMBER 3i The Chemical World This Week JULY 30, 1962

Chemical Business Continues Strong Many companies set sales records; most increase profits substantially during this year's first six months

Chemical business is continuing to im­prove strongly. The first six months of this year were both prosperous and encouraging for the nation's chemical producers. Sales are higher for all companies posting early half-year statements. Earnings of practically all companies are up impressively from those turned in during the first six months of 1961.

In fact, many chemical companies are boasting of record high earnings and sales. American Cyanamid, Rohm & Haas, and FMC Corp. are among those that say their earnings set all-time highs during this year's first six months as well as during this year's second quarter. Monsanto says its second quarter income was the best in its history too. Monsanto's per-share earnings were greater in the second quarter of 1959, but only because it had fewer shares outstanding then.

Sales records were broken by many chemical companies. Monsanto, Union Carbide, Du Pont, Allied, Cy­anamid, Celanese, FMC Corp., Rohm & Haas, and Eli Lilly all chalked up new quarterly and/or half-year sales records. Du Pont's second quarter sales reached $631 million, an increase of 9% over the previous quarterly high set in this year's first quarter. Eli Lilly says its six-month sales topped its 1957 record by about 7%.

There's little doubt that the im­provement in chemical business, which started in the third quarter of last year, is continuing. Most com­pany executives are generally optimis­tic about business for the last six months of this year. Nevertheless, their optimism is blended with a cer­tain uncertainty as to how the U.S. economy will perform as a whole.

Chemical Executives Are Generally Optimistic About Sales and Earnings . . . Sales are ahead in almost the entire line. We expeit a good year. DR. ROBERT CUTTER, president of Cutter Laboratories

Unless there's a major change in the economy, sales and earnings for the second half of 1962 should equal or exceed the same period a year ago. PAUL DAVIES, chairman of FMC Corp.

While the chemical industry is generally optimistic that the present level of sales will continue, the optimism is tempered by the uncertainty of the economy. H. E. MARTIN, chairman of Metal & Thermit Corp.

In Spite of Continuing Price Problems

The imOrovement in earnings for the first half was particularly gratifying in the face of continuing price pressures. DR. WILBUR MALCOLM, chairman of American Cyanamid

While price weaknesses continued there was no indication that the price situation is worsening, and volume of sales in most chemical lines continued strong.

ALLIED CHEMICAL

The Trend in Profit Margins Remains Uncertain

•Net Income, Per Cent rter First Quarter

1962

ofSc

Company Second Qua

1961

•Net Income, Per Cent rter First Quarter

1962

ofSc Second Quarter

1962

Air Reduction 5.7% 7.0% 6.5% Allied Chemical 8.3 5.9 6.4 American Cyanamid 7.6 10.1 8.6 Commercial Solvents 9.2 8.1 9.3 Du Pont 18.0 18.1 18.7 Hercules Powder 8.2 6.6 7.8 Hooker Chemical 8.5 8.1 8.7 Monsanto Chemical 7.7 7.4 8.0 Rohm & Haas 9.8 9.4 10.9 Union Carbide 9.3 9.3 9.3

J U L Y 30, 1962 C & E N 33

Still Problems. During the first half of 1961, chemical companies, for the most part, were unable -to boost sales from the same period a year before. And only about one corripany in four was able to report higher profits. This year, earnings reports make much brighter reading but the industry still faces essentially the same problems as it did a year ago.

The biggest problem probably cen­ters on prices. Prices of chemical products have continued to decline, taking a bite out of profits. But there is some indication that the in­dustry is beginning to live with the problem. Allied, for one, seems to take comfort in the fact that the price situation isn't getting any wTorse.

Profit-margin problems appear to be easing, too. For example, Du Pont, Monsanto, Commercial Solvents, and Rohm & Haas all managed to mark up higher profit margins dur­ing this year's second quarter than they did for the same period a year ago or for the first quarter of this year.

Exceptions. Among the large chem­ical companies, Allied is the only company whose net income dropped substantially during the first half of this year. "Lower earnings," it says, "were due to higher depreciation and extraordinary start-up charges of about 12 cents a share." It also cites lower selling prices in some product lines and a "temporary decrease in sales of natural gas to the Texas Gas Trans­

mission Co. to average out quantities supplied in excess of contract mini-mums in the 1961-62 heating season."

Miles Laboratories, Parke-Davis, and Rexall are the only drug com­panies reporting so far that failed to increase profits during this year's first half. Miles blames its lower earnings on the cost-price squeeze and ex­penses involved in opening new re­search facilities. Parke-Davis says its lower income reflects the intervention of its Cuban plant and distribution center and currency devaluations, es­pecially in Canada. Rexall cites start­up costs for chemical and plastics plants. Rexall says its chemical di­vision should make a modest contri­bution-to profits in 1963.

First-Half Earnings and Sales Score Big Gains First Half, 1962 Earnings /Share

CHEMICALS

ÏV5 Sales

(Millions)

Change Net from Income 1961 (Millions)

Change from 1961

Second Quarter

1961

First Quarter

1962

Second Quarter

1962

Air Reduction $ 126.4 +14% $ 8.5 +34% $0.74 $0.98 $0.95 Allied Chemical" 441.4 +4 27.1 -17 0.74 0.46 0.57 American Cyanamid 338.1 +12 31.6 +33 0.54 0.81 0.67 American Enka6 63.3 +32 4.0 +122 0.91 1.52 1.59 American Potash 23.9 +5 2.1 + <1 0.47 0.46 0.44 Celanese 160.5 +20 14.9 +62 0.52 0.73 0.80 Commercial Solvents 42.7 +31 3.7 +31 0.55 0.56 0.71 Du Pont 1210 +12 223 +18 2.15 2.23 2.52 Eagle- Picher* 56.8 +7 1.6 +33 0.36 0.30 0.49 FMC Corp. 271.6 +32 15.2 +19 1.17 0.79 1.33 Hagan Chemicals" 20.1 + < 1 0.8 +3 0.58 0.32 0.58 Hercuies Powder" 223.0 +23 16.2 +22 0.42 0.38 0.50 Hooker Chemical* 88.6 +13 7.5 +18 0.43 0.43 0.49 Interchemical Corp. 71.9 +10 2.9 +32 0.62 0.55 0.75 Metal & Thermit 24.1 +15 1.0 +44 0.58 0.64 0.63 Monsanto 536.6 +15 41.4 +20 0.68 0.69 0.78 National Distillers 395.2 +9 11.6 +13 0.37 0.46 0.38 National Lead 286.4 +6 23.9 +1 1.10 0.92 1.03 National Starch 35.7 +9 2.2 +17 0.50 0.46 0.54 Rohm & Haas 124.8 +13 12.7 +31 1.22 1.16 1.55 Texas Gulf Sulphur 30.6 +4 6.4 +5 0.33 0.33 0.30 Union Carbide 801.9 +7 74.5 +7 1.19 1.25 1.22 Virginia Chemicals & Smelting 7.3 +13 0.4 +14 0.29 0.28 0.35

PHARMACEUTICALS

Abbott Laboratories 70.6 +13 6.7 +32 0.37 1.20 0.47 Baxter Laboratories 20.8 +12 1.5 +29 0.20 0.24 0.28 Cutter Laboratories 14.4 +14 0.7 +65 0.19 0.17 0.25 Eli Lilly 107.5 +9 13.5 +13 0.78 0.97 0.71 Merck & Co. 118.3 +5 13.6 +10 0.57 0.65 0.60 Miles Laboratories 47.9 +8 1.8 -25 0.33 0.23 0.22 Parke-Davis 89.3 - 1 8.5 - 1 0 0.25 0.38 0.19 Rexall Drug and Chemical 136.4 +13 2.8 —35 0.50 0.36 0.26 Schering Corp." 43.3 +7 4.3 +17 0.45 0.60 0.43 Smith Kline & French 88.9 +12 16.2 +14 0.51 0.58 0.53 Upjohn 82.7 +5 10.8 +7 0.33 0.40 0.37 U.S. Vitamin* 7.6 +1 1.0 +1 0.31 0.18 0.34 β Includes other operating revenue. b For first 24 weeks, f For 1962, includes sales of $8 million and earnings of 27 cents per share for first six months (17 cents a share for the second quarter) from operations of Northwest Νitro-Chemical, Ltd., now consolidated. d For six months ended May 31, 1962.

34 C&EN JULY 30, 1962