chemicals post best year yet
Post on 16-Feb-2017
Embed Size (px)
the newsmagazine of the chemical world VOLUME 38, NUMBER 6 FEBRUARY 8, 1960
Chemicals Post Best Year Yet Record-breaking sales and profits in 1959 set the stage for further gains during the year ahead
IF YOU ARE looking for a quick two-word summary of 1959, "most satisfac-tory" probably will do. That is how Hercules Powder president Albert E. Forster described it in reporting record sales and earnings to stockholders. His view is echoed by a raft of other com-panies now reporting last year's results.
For many of the companies that have already added up preliminary figures on annual results, sales and earnings climbed to all-time highs. Annual re-ports will make pleasant reading es-pecially when contrasted with the re-cession dampened figures of the year before. Several firms did much better
than they were willing to predict at this time last year.
Nevertheless, 1959 ended on a slightly muted note. For while the year itself was a record breaker, its final quarter was a bit of a disappointment. Sales held up well. But profits dropped, in many cases to the lowest
Earnings Bounced Back Strongly Last Year
Rohm & Haas
Smith Kline & French
a Includes other operating revenue. b Excludes nonrecurring TOM equal to 4 cents i t For year ended Nov. 30.
+ 11 + 8
+ 2 0
+ 2 3
+ 2 0
+ 2 7
+ 2 2
Change from 7 958
Earnings /Share 1958 1959
+ 11% $ 3.47
+ 4 6
+ 3 6
- 3 4
+ 3 1
+ 7 5
+ 11 + 3 4
+ 6 8
+ 2 6
- 1 8
+ 4 2
+ 2 5
+ 4 1
+ 5 9
+ 2 0
+ 2 3
+ 3 7
Profits, % of Sales
FEB. 8. I 9 6 0 C & E N 1 9
Dow Turns to Nylon-6 Will build plant in Virginia; plans to be on stream in mid-1961, aiming for tire cord market
levels of the year and below the strong showing turned in by 1958's final three months.
The steel strike gets much of the blame for pulling down the latter part of the year. Union Carbide president Morse G. Dial notes that the strike hit sales of alloys, electrodes, and gases to steel producers during the third quarter and then had a delayed effect on sales of chemicals and plastics to indus-tries hampered by steel shortages. As a result, Carbide's earnings for the last half of the year ran about 30 cents a share behind first-half profits.
Allied Chemical cites another factor. Its fourth quarter, although depressed by the impact of the strike, showed 7% higher sales than in the same period of 1958. But profits fell 4% behind the 1958 period because of higher costs. Allied had to substitute more expensive raw materials for coal chemicals it usu-ally obtains from the steel industry.
Companies doing business with steel producers were not the only ones to run into a slight snag in the final quar-ter of last year. American Viscose says fourth quarter earnings dropped to $1.8 million, about $1 million under 1958's last quarter; Chemstrand reports final quarter profits of $3.2 million compared with $6.6 million the year before. Here again, the over-all impact of the steel strike on the nation's economy supplies part of the answer, as does the reduc-tion of prices for rayon and nylon tire cord.
Optimistic Outlook. With steel mills again operating close to capacity and the nation's economy in high gear, chemical company executives are just about unanimous in predicting further gains for 1960. But they are wary about being pinned down to actual dollars-and-cents forecasts. The first half should be very strong. But the second half poses a lot of question marks.
Hercules' Forster sees 1960 as a whole as a "very good year." Hercules expects sales to fop last year by some-thing around 8 to 10%, with profits do-ing a bit better. (The company op-erated at close to 85% of capacity last year, about as good as it can expect.) Projections of other companies fall roughly along parallel lines.
One problem facing the industry: Can profit margins be maintained or in-creased? With plants operating at high levels and sales rising, margins look safe. But it will be touch-and-go whether operating efficiency and prices can keep pace with higher costs.
A N Y QUESTIONS about how far Dow will go with fibers are answered now. The company jumped into the nylon-6 picture last week with plans to build a 12 million pound-a-year plant at Wil-liamsburg, Va. Construction will start next month, and the plant is due on stream late next year.
Nylon-6 is made from caprolactam, and Dow will get this from the Dow Badische plant being built in Freeport, Tex. Dow will use the H. Zimmer Co. (Frankfurt, Germany) process. Zim-mer will also supply the equipment for the plant.
Dow's move will give the firm the last side in the textile marketing triangle apparel, home furnishings, and in-dustrial fibers. Dow competes in the apparel market with Zefran, an acrylic fiber (85% acrylonitrile) made at Wil-liamsburg. Plant capacity: 12 million pounds a year. It supplies the home furnishings field with Rovana, a saran filament (vinylidene chloride copoly-mer), and with Lurex, a metallic yarn with either a butyrate or polyester fiber. Nylon-6 will come along to put Dow in the industrial fiber business. Most of Dow's nylon output will go for yarns used in tires.
The new plant will in no way affect operations at the Zefran plant, which has been on stream since mid-1958. The new plant will need about 250 new employees, many of whom will be tech-nical people recruited by Dow.
Added Twist. An added wrinkle to Dow's latest move is the stepped-up race for nylon-6 capacity. Late last year, Firestone announced plans to build a 12 million pound-per-year plant at Hopewell, Va. The plant is under construction and should be on stream late this year. Firestone will also use the Zimmer process and will buy its caprolactam. When running, the plant will supply 15% of Firestone's nylon tire cord needs. The firm plans to sell nylon-6 for other uses later.
Last month Allied Chemical said it would triple its nylon-6 capacity at Hopewell. The plant can make 24 million pounds a year now; Allied will have it up to around 75 million pounds by mid-1961. About 65% is earmarked for the tire cord market; the balance will go to other outlets such as indus-
trial conveyor belts, marine hawsers, webbings, and coated tarpaulin fabrics.
Allied makes its own caprolactam in an 84 million pound-a-year plant at Hopewell. With nylon-6 capacity go-ing up, Allied will also add more facili-ties for caprolactam.
Lush Market Ahead. The rush for more nylon-6 capacity has participants keyed up over vast market potentials for auto tire cords. Target: 300 mil-lion pounds by 1965.
This year, production of nylon-66 (made by Du Pont and Chemstrand) and nylon-6 for tire cords should near 140 million pounds. It was 120 mil-lion pounds in 1959. Capacity for ny-lon for auto tire cords (840 denier) stands at 190 million pounds. The total domestic capacity for nylon fiber is 437 million pounds, and it breaks down as follows:
840 and over 198 200 to 840 48 Below 200 155 Staple 36
Since coming on the tire cord scene in 1947, nylon has gained steadily at the expense of rayon cords (which all but displaced cotton) and now has about 30% of the tire cord market. By 1965, nylon producers hope to have nearly 75%. The big market would come if nylon should break into original equipment tires. Today, original equip-ment tires are still in the rayon