EARNINGS PREVIEW:US Chemical Cos See Continued Rebound In Demand

Date : 04/14/2011 @ 11:45AM
Source : Dow Jones News
Stock : Air Products And Chemicals, Inc. (APD)
Quote : 168.6  0.8 (0.48%) @ 4:00PM

EARNINGS PREVIEW:US Chemical Cos See Continued Rebound In Demand

Air Products (NYSE:APD)
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TAKING THE PULSE: Cheap natural gas has given U.S. chemicals producers a competitive lift above overseas rivals, and supply bottlenecks started to emerge even before Japan's crisis hit some specialty segments. High raw material prices and a possible return to slower economic growth will pose tough choices for industry executives about investment and deal-making, which has made a return in recent months.

   Air Products & Chemicals Inc. (APD) - reports April 21 

Wall Street Expectations: Analysts expect a fiscal second-quarter profit of $1.39 a share and $2.43 billion in revenue. A year earlier, the then-suitor of Airgas Inc. (ARG) reported a profit of $1.16 a share, which included a 7-cent charge related to the acquisition bid, on $2.25 billion in sales.

Key Issues: Air Products has posted expectation-beating results of late as its merchant gases business, its largest by revenue, grows on booming sales in Asia. The company in the fiscal first quarter also saw double-digit growth in its electronics and performance materials segment and tonnage gases segment, which sells hydrogen, synthesis gas and carbon monoxide to refineries and other large manufacturers. The industrial-gas maker has cited rising raw materials costs for some recently announced pricing increases, but still managed to raise its quarterly dividend 18% last month in a bid to return value to shareholders after the company's bruising attempt to take over rival Airgas.

   DuPont (DD) - reports April 21 

Wall Street Expectations: Wall Street forecasts a first-quarter profit of $1.36 a share on $9.19 billion in revenue. A year earlier, the company posted a per-share profit of $1.24, including 10 cents of currency benefits, on revenue of $8.48 billion.

Key Issues: The 209-year-old U.S. manufacturer has almost closed its $5.8-billion acquisition of Danisco A/S (DNSCY, DCO.KO), a Danish ingredients and enzyme maker that is seen as complementing DuPont's nutrition and biotechnology operations. Fitch Ratings last month raised its outlook on DuPont, noting its global reach to vital emerging markets, margin-boosting patent protections and robust end-market demand for many of its chemicals. The ratings agency also said the chemicals maker's credit profile should be able to weather the Danisco acquisition.

   Praxair Inc. (PX) - reports April 27 

Wall Street Expectations: Praxair has forecast a first-quarter per-share profit of $1.23 to $1.28 a share, bracketing analysts' most recent $1.26 projection. Wall street also expects $2.64 billion in revenue. Last year, the company earned $1.01 a share, which included 8-cent tax charge, on $2.43 billion in revenue.

Key Issues: The largest industrial gas company in North and South America continues to benefit from its strong position in emerging markets. A Jefferies analysis sees once-languishing North American packaged gas sales stabilizing, though still below their 2008 peak, while hydrogen demand from countries like Mexico and Brazil accelerates. Praxair will look to pass rising input costs onto customers with price increases.

   Dow Chemical Co. (DOW) - reports April 28 

Wall Street Expectations: Analysts see Dow Chemical earning a first-quarter profit of 65 cents a share and $13.92 billion in revenue. The company reported a prior-year per-share profit of 41 cents, or 43 cents excluding restructuring costs and other items, on revenue of $13.42 billion

Key Issues: The largest U.S. chemical producer by revenue continues to diversify its portfolio of specialty chemicals, agricultural products and other high-tech offerings that reap bigger margins than commodity chemicals. In the first quarter, the company launched its sixth business segment, the performance plastics division, to specifically cater to the packaging, hygiene, food and telecom industries. Overall margins have expanded for seven straight quarters as the company focuses on more lucrative materials, but Chief Executive Andrew Liveris in February warned of trouble ahead if Dow's robust sales gains fail to keep up with emerging-market inflation.

   LyondellBasell Industries NV (LYB) - expected to report April 29 

Wall Street Expectations: Analysts expect the company formed after the 2007 merger of Houston-based Lyondell and the European Basell to earn a fiscal first-quarter profit of 72 cents a share on $10.62 billion in revenue. LyondellBasell was going through Chapter 11 bankruptcy proceedings last year before it emerged as a new company through a record $8 billion in debtor-in-possession financing.

Key Issues: Business conditions and results improved last year, most notably in the olefins and polyolefins and propylene oxide businesses. At the same time, planned turnarounds at LyondellBasell's Houston oil refinery are expected to soften results, and the company last month had to revise its fourth-quarter earnings downward after a correction to its tax accounting. Still, analysis from Dahlman Rose points to the company's improved scale and feedstock flexibility as strengths.

   Airgas Inc. (ARG) - reports May 5 

Wall Street Expectations: Analysts see Airgas' fourth-quarter earnings at 85 cents a share on $1.07 billion in revenue. A year earlier, the company made 47 cents a share, which included 22 cents a share in legal charges and other items, on $980.4 million in revenue.

Key Issues: After successfully fending off a year-long hostile approach from Air Products, Airgas will focus more on mundane metrics such as cylinder utilization, which has climbed for two straight quarters. Pricing traction and its lobbying efforts on tax overhaul -- Airgas has one of the highest corporate rates in the sector -- will also be in focus.

(The Thomson Reuters estimates and year-earlier figures may not be comparable due to one-time items and other adjustments.)

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com


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