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Record results for plastics at PolyOne, ExxonMobil, Dow, and Eastman

One year ago, an investor could have done a lot worse than bet on plastics if the record results and 52-week performance of PolyOne, ExxonMobil, Dow, and Eastman are any indication. Over the last year, those companies, which all recently reported earnings, saw their share prices double or nearly double in value: Eastman ($51 to $94), Exxon Mobil ($55 to $83), PolyOne ($7 to $14), and Dow Chemical ($22 to $37).

PlasticsToday Staff

February 7, 2011

5 Min Read
Record results for plastics at PolyOne, ExxonMobil, Dow, and Eastman

Fourth-quarter and full-year 2010 earnings statements by these plastics suppliers showed how far the industry came back in 2010 from its precipitous drop in 2009. Higher volumes and prices at Polyone, ExxonMobil Chemical, Dow, and Eastman pushed results higher, with renewed demand from North America and continued strong growth overseas, particularly in emerging regions.

Last year was a record-breaking one for PolyOne Corp. (Avon Lake, OH), which saw full-year revenues in 2010 increase 27% to $2.6 billion, while earnings per share, excluding special items and tax adjustments, expanded 55%. "These quarterly results mark the completion of a record-breaking year, and illustrate the progress we have made in transforming PolyOne," said Stephen D. Newlin, chairman, president, and CEO. Consolidated revenue growth was aided by a 6% increase in volume and higher selling prices.

The strong performance has reinforced the company's coffers, with PolyOne ending the year with $378 million in cash and $506 million of liquidity. That cash allowed it in January to acquire Uniplen, a Brazilian specialty engineered materials and thermoplastics distribution business with annual revenues of $34 million. It will combine that business with Polimaster, the Brazilian color business its acquired in October 2010.

Newlin said the strides made by PolyOne in 2010 are expected to continue in 2011 and beyond. "It is important for investors to understand that the PolyOne story is far from over. We view the past several quarters of success as just the beginning of a multi-year improvement in revenue, profit margin, and earnings per share. We expect double digit EPS (earnings per share) expansion in 2011, and we are well on our way to meeting or exceeding our aggressive 2012 financial targets."

Dow Chemical sets record for emerging markets' business

Dow Chemical reported sales of $13.8 billion for the fourth quarter, up 22% versus the same quarter last year. Except Coatings and Infrastructure, which rose 6%, sales increased by double-digits in all geographic areas and all operating segments. Part of that boost was due to 10% in price increases, which more than offsetting a $685 million increase in purchased feedstock and energy costs.

The $4.5 billion earned in emerging regions sales set a new quarterly record. This was driven by volume growth in Thailand (33%), India (31%), Russia (30%), and Brazil (14%).
For the full year, sales in the emerging geographies were $16 billion, another record for Dow. Dow's fourth-quarter global operating rate was up 5 percentage points year-over-year to 81%  percent.

Sales in its plastics unit, which includes polyethylene (PE), polypropylene (PP), polycarbonate (PC), PC blends, licensing, and catalysts, were up 20% to $2.9 billion, in the fourth quarter. Plastics volume increased 4%, while prices rose 16%. Equity earnings for the segment were $68 million, compared with a loss of $1 million in the year-ago period, which was reduced $65 million for charges related to the sale of one of its Equipolymers joint-venture plants. Plastics EBITDA (earnings before income taxes, amortization, depreciation) for the quarter was $765 million, including a $5 million charge related to the divestiture of its Styron styrenics business. Polyurethane, which falls under Performance Products, and elastomers, which are included in Performance Systems, were both higher as well.

Exxon Mobil sets record for 2010 chemical sales

Exxon Mobil's fourth-quarter earnings of $9.250 billion, were up 53% from the prior fourth quarter's figure. In the Chemical unit, which includes PE, PP, and specialty elastomers, the earnings of $1.067 billion were up $351 million from the fourth quarter of 2009. Improved margins in plastics increased earnings by $380 million, with fourth quarter prime product sales of 6,349 kt (thousands of metric tons) actually 326 kt lower than the prior year.

For the full year, chemical earnings were a record $4.913 billion, up $2.604 billion from 2009. Improved margins increased earnings by $2 billion, and higher volumes increased them by an additional $380 million. Prime product sales were up 1,066 kt from 2009 to 25,891 kt. In the chemical unit, earnings for the U.S. nearly quadrupled for the year, rising from $769 million in 2009 to $2.422 billion in 2010. Outside the U.S., full-year sales rose from $1.540 billion to $2.491 billion. 

Eastman's full-year specialty plastics earnings jump from $13 to $93 million

In 2010, Eastman Chemical Co. (Kingsport, TN) "established a new level of earnings performance," according to its chairman and CEO, Jim Rogers. Fourth-quarter 2010 sales revenue was up 23% to $1.5 billion over 2009 on higher volume and increased selling prices. Operating earnings in fourth quarter came in at $161 million compared to an operating loss of $4 million in fourth quarter 2009.

In the company's specialty plastics, which includes its copolyester products, sales revenue jumped 26% due to higher volume and selling prices. Operating earnings in the fourth quarter 2010, excluding asset impairments and restructuring charges, were $24 million compared to $9 million for the year-ago quarter.

Eastman's full-year 2010 sales revenue was $5.8 billion, up 33% year-over-year. Operating earnings for full-year 2010 were $862 million compared to $345 million for 2009. For specialty plastics, sales revenue in 2010 increased by 39% primarily due to higher volume. Operating earnings soared to $93 million in 2010 compared to $13 million in 2009. Eastman said the staggering increase was primarily due to higher sales volume and increased capacity utilization, which ultimately lowered unit costs. In May of last year, the company opened an expanded Tritan production line at its Kingsport, TN manufacturing site. As Eastman moved forward with copolyester in 2010, it move exited polyethylene terephthalate (PET), selling its remaining assets to DAK Americas on Jan. 31, 2011.

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