Chemical & Engineering News,
May 8, 1995

Copyright © 1995 by the American Chemical Society.

Sales And Profits Improve For Top 100 Chemical Producers

Combined sales and operating earnings of largest chemical producers in 1994 reflect overall U.S. economic growth

George Peaff

C&EN Northeast News Bureau

Talk about trickle-down economics: The robust growth of the U.S. economy helped the Top 100 chemical makers in the U.S. post strong gains in both sales and earnings in 1994.

Whereas the government estimates that gross domestic product expanded 6.2% in current dollars, chemical sales as represented by the total for the largest 100 producers grew some 9.5%.

As the U.S. economy expanded in 1994, both chemical volume and pricing increased, helping companies increase sales and operating earnings, unlike 1993, when sales remained flat and operating profits mostly benefited from cost-cutting efforts and operating efficiency improvements.

Last year, chemical sales - for the 100 companies ranked - reached $200.8 billion, compared with $183.4 billion for the 100 companies ranked in 1993. Only nine companies in the ranking for 1994 posted a sales decline, compared with 39 in 1993.

DuPont kept its first-place position as the largest U.S. chemical producer, finishing 1994 with chemical sales of $16.9 billion, an 8.0% gain over 1993. Dow Chemical remained second, with 1994 chemical sales of $14.1 billion - a 12.2% gain over 1993 - followed by Exxon ($11.0 billion), Hoechst Celanese ($7.03 billion), and Monsanto ($5.94 billion). Amoco replaced BASF as the ninth largest producer, with chemical sales topping $4.66 billion in 1994, a 23.6% gain from 1993.

Among newcomers to this year's ranking are Albemarle - the recent spin-off from Ethyl Corp. - as well as OSi Specialties, formerly a division of Union Carbide, and Harris Chemical. As a result of Albemarle's spin-off, Ethyl's sales dropped 47% from 1993.

The compilation of the Top 100 chemical producers continues to be a challenging task because many companies do not break out their segment and geographic financial statistics - including operating earnings and identifiable assets - from their consolidated statistics in their annual reports and statements. This is especially true with the foreign-held firms.

Of the 100 producers, the 51 chemical companies - defined by C&EN as those with 50% or more of their sales derived from chemicals - accounted for 42% of the total sales in 1994, matching the 1993 percentage. Seventeen foreign-held companies made up 20% of the sales, also matching the 1993 share. Each of the remaining two categories - petroleum and gas producers (13 companies) and diversified and other companies (19 firms) - represented 19% of the sales. In 1993, petroleum and gas producers represented 18% of the sales, and diversified and other companies made up 20% of the total.

Bayer Corp., formerly called Miles Inc., did not break out chemical sales in its 1994 annual statement, so it no longer appears in the ranking. In 1993, Miles's sales were $3.05 billion, ranking it 17th among U.S. producers. Other significant chemical producers, including Procter & Gamble and 3M, also are not listed in the ranking because their chemical sales are not broken out in their annual reports. Still others are privately held and do not publish financial data, including Freedom Chemical, J. M. Huber, and PQ Corp.

BP America, also a perennial member of the Top 100, was not ranked because its 1994 chemical sales were not available by press time. In 1993, BP's U.S. chemical sales were $1.04 billion, ranking it 48th. Tenneco exits the list with the spin-off of its U.K.-based specialty chemicals business, Albright & Wilson, which Tenneco recorded as a discontinued operation in its 1994 annual report.

In some cases, chemical sales may be overstated or understated, depending on the company. General Electric and AlliedSignal report "materials" and "engineered materials," respectively; these categories contain both chemical and nonchemical products but are not broken down as such. Conversely, chemical sales reported by PPG Industries and Witco most likely are understated because the companies have nonchemical business units that sell chemicals.

Companies that completed major recent acquisitions made bold jumps in the ranking. For instance, Huntsman Chemical, which purchased Texaco's chemical division - hence, Texaco's exit from the ranking - boosted sales to $3.40 billion in 1994 from $1.85 billion in 1993. Huntsman became the 17th largest producer; in 1993, it was 30th.

Agrochemical producers did well as a group, with several posting greatly improved sales in 1994. IMC Global, which changed its name from IMC Fertilizer, recorded a 60.7% rise in sales, moving it up 20 places in the ranking to 38th. Arcadian Partners, Farmland Industries, CF Industries, and Terra Industries also moved up in the rankings, with sales increasing 37.8%, 31.4%, 30.6%, and 60.2%, respectively.

The British conglomerate Hanson's purchase of Quantum Chemical helped its U.S.-based chemical sales grow to $2.70 billion in 1994 from $911 million in 1993, ranking it 27th in 1994 versus 54th in 1993.

DuPont regained the top position in chemical operating profits, reporting $2.70 billion in 1994, up 260% from 1993, when it ranked third. Last year, General Electric ranked first in operating profits, but at $967 million in 1994, it dropped to fourth place behind Dow Chemical ($1.80 billion) and Exxon ($1.26 billion). Monsanto finished fifth, with chemical operating profits of $780 million.

However, the greatest gainer in operating profits in 1994 - in terms of percent increase - was Borden Chemicals & Plastics. Its operating profits topped $190 million in 1994, compared with $17 million in 1993. Borden's sales rose to $658 million in 1994, a 51.8% rise from 1993, ranking it fifth in terms of percentage sales growth - behind Hanson, Huntsman, IMC Global, and Terra Industries.

Terra Nitrogen finished as the 1994 leader in profit margin at 29.2%. Formerly Agricultural Minerals, Terra Nitrogen became a limited partnership controlled by Terra Industries, which has plans to purchase the remaining share of Terra Nitrogen that it does not hold. Borden Chemicals finished 1994 with a profit margin of 28.9%, followed by Terra Industries (24.8%), Georgia Gulf (24.1%), Lyondell Petrochemical (23.2%), Sigma-Aldrich (21.8%), and Great Lakes Chemical (21.1%).

DuPont continues to hold the largest amount of identifiable chemical assets at $14.1 billion, followed by Dow Chemical ($13.3 billion), Exxon ($8.78 billion), General Electric ($8.63 billion), and Occidental Petroleum ($5.94 billion).

As it did in 1993, Georgia Gulf led the ranking in terms of return on chemical assets at 45.3%, followed by Lyondell (44.6%), Fina (40.7%), Farmland Industries (35.3%), Borden (35.1%), and First Mississippi (31.0%).

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