Petrochems back in business
25 Nov 2010
A whole raft of companies have announced third-quarter results that were far removed from the recessionary gloom of two years ago. Volumes are up, prices are increasing - with more hikes surely to come as the price of oil escalated rapidly in early November on the back of strong manufacturing data from China and the US - and the talk is of plant expansions rather than closures and mothballing.
Royal Dutch Shell’s results, for example, rebounded substantially from year-ago levels. We are seeing new growth, said chief executive officer Peter Voser, with improved earnings and cash flow, underpinned by a 5% increase in oil and gas production, a 22% increase in LNG sales and increased downstream volumes.
Even more bullish was BASF, which reported demand continuing at a high level and little sign of any seasonal slowdown. Sales were up 23%, while earnings (EBIT) before special items soared 77%, with growth in all regions.
Forecasts for the full year were raised as chairman Dr Jürgen Hambrecht said: “We are now profiting from the favourable economic environment because we further improved our competitiveness in the crisis and made our portfolio even more cyclically resilient.”
Bayer also reported a very positive performance, with sales up 16% and earnings (EBITDA) ahead by over 10%. New chairman Dr Marijn Dekkers said he remained confident for the rest of 2010 and foresaw “very good perspectives for our business in the long term”.
Across the pond, Dow doubled earnings per share compared with a year ago. The EBITDA margin at company level was 15% and earnings were at their highest level since the second quarter of 2008. Sales improved 7% compared with last year as volumes increased 14%.
Chairman and chief executive officer Andrew Liveris highlighted sustained momentum in emerging geographies on the back of solid demand recovery in Europe and North America from Dow’s “transformed portfolio”. Operating rates reached levels not seen since the first quarter of 2008, he added.
The third quarter also brought cheer to the engineering sector, ABB, for example, reporting accelerated order growth and higher revenues, leading to an EBIT margin of 14%.
“We continued to take full advantage of the global industrial recovery,” explained chief executive officer Joe Hogan. “Our shorter-cycle automation businesses turned in a particularly positive performance.”
Demand increased across a broad range of industries, including metals and minerals, marine, pulp and paper, discrete manufacturing and renewable energies. Looking forward, ABB said: “Industrial customers are spending more on automation and power equipment and solutions to increase the energy efficiency and productivity of their existing assets.”
