Monday, May 14, 2012

Chemical companies 1Q earnings a little wobbly

From this week's C&EN, a writeup of the first quarter results for chemical firms by Melody Bomgardner: 
"Earnings reports for the first quarter of 2012 highlight the diversity of the U.S. chemical industry. While several firms took advantage of a strong and profitable start to the agriculture season, other companies battled weak demand in Europe, slowing growth in Asia, and comatose end markets for electronics and other durable goods. For the 24 firms tracked by C&EN, sales in the first quarter grew an average of 6.4% compared with the year-ago period. It is the slowest growth rate since the end of the recession in the fourth quarter of 2009. In recent quarters, the industry increased revenues and earnings by raising prices, but in the first quarter of 2012, the strategy did not make up for receding sales volumes; earnings sank 8.4% compared with last year. [snip] 
...The progress that Liveris spied in March seems to have continued into April, according to a review of economic indicators by the American Chemistry Council, a trade group of U.S. chemical makers. Chief Economist T. Kevin Swift lists gains in consumer income and spending, sales of light vehicles, and upticks in construction and manufacturing as positives for chemical firms.  
“From a global viewpoint, the U.S. gain in factory output [in April] offset weakness in the euro area,” he said. “How long this can continue is the big question.” Employment gains for the month were lower than expected, fueling concerns that the recovery has slowed in recent months, Swift cautioned. "
I think we would all like to think that the economy is going to keep improving and suddenly go into a strong 3% GDP/year phase, where we'll all get raises and prices for consumer goods will drop, drop, drop. That doesn't really seem to be the case, does it?

I sure hope T. Kevin Swift is a pessimist (and enough of one.) 

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