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May 15, 2006
Volume 84, Number 20
pp. 23-27

Top 50 Chemical Producers

Latest survey reflects several mergers and another strong year for U.S. chemical makers

Alexander H. Tullo

C&EN's 2006 survey of the top U.S. chemical producers reveals some big changes in the relative standings of prominent companies. What hasn't changed from last year is that the survey once again shows a U.S. chemical industry enjoying an era of strong growth and profitability.

ExxonMobil Photo

Clean Machine A cogeneration plant at ExxonMobil's Baytown, Texas, chemical and refining complex.

Two factors explain the abundance of changes this year compared with last year. One is an industry consolidation spree in which a few large chemical producers have gobbled up others. Another is strong growth, driven largely by rising prices, that has given some companies a big lift, particularly those laden with petrochemical operations.

The total sales of the Top 50 U.S. chemical companies in this year's survey, which is based on the companies' 2005 financial results, are $281.5 billion, a 10.9% increase over last year's sales. The Top 50 companies enjoyed 23% growth in 2004, reflecting a turnaround year for the U.S. chemical industry.

Aggregate operating profits for the group climbed 37.7% over those of a year ago, hitting $25.2 billion. Last year's survey found even stronger profit growth of 66.4%.

Of the 50 companies surveyed, only three-DuPont, Honeywell, and Monsanto-posted a decrease in chemical sales compared with their year-ago results. Of the 42 companies for which profit numbers could be obtained, only seven posted a decrease in profits.

Once again, Dow Chemical is the top dog among U.S. chemical companies. Its growth of 15.3% gave the company record 2005 revenues of $46.3 billion. Dow also raked in more operating profits than any other U.S. chemical company, $5.4 billion, an eye-popping 56.5% increase over the previous year's profits.

In his remarks to financial analysts about Dow's fourth-quarter 2005 results, Chief Executive Officer Andrew N. Liveris pointed out that the company had its "best year ever" despite considerable adversity. "2005 was a year with many challenges for our company, including relentlessly escalating feedstock and energy costs and two major hurricanes that caused significant disruption to Dow's operations on the U.S. Gulf Coast and to our logistics across the region," he recalled. "Against that backdrop, our results were very good indeed. By nearly every measure, this was a record-setting year for Dow."

The records weren't limited to Dow; ExxonMobil Chemical also saw unprecedented results. Its revenues were $31.2 billion in 2005, an increase of 12.3% over 2004 and enough to vault the company over DuPont, last year's number two company. DuPont had consistently led the rankings from when the survey began in 1969 until Dow overtook it five years ago.

ExxonMobil Chemical also posted record profits of $3.9 billion, a 15.0% increase over last year's and giving it the second place ranking in profits as well. It should be noted that ExxonMobil's profit numbers, unlike those of other companies, are after tax. Had the company made operating profits available, its profit figures would have been even higher, though likely still second to Dow's.

At a New York City meeting with analysts in March, J. Stephen Simon, executive vice president at ExxonMobil Corp., boasted about Exxon's chemical results, which were better, he noted, than those of other oil companies. "Our chemical performance is the result of proven long-term strategies which have produced continuous growth in earnings while delivering industry-leading returns."

Simon also had a few words about Dow at the meeting. "Dow, whom we consider a formidable chemical-only competitor, also increased earnings, but at a slower pace and with a much higher capital base," he pointed out.

Sales at number three DuPont declined 6.7% from the year before. The company went a full fiscal year without the results of its fibers business Invista, which it sold to Koch Industries in 2004.

Lyondell Chemical rocketed up the survey this year. The company's 212% increase in sales to $18.6 billion lifted it from 13th in the 2005 survey to number four this year. The increase is the result of the December 2004 purchase of Millennium Chemicals, a move that integrated both Millennium and Equistar, Lyondell's petrochemical joint venture with Millennium, into Lyondell. Because Lyondell only had a month of revenues from Millennium and Equistar in 2004, Lyondell's ranking in the 2005 survey wasn't influenced by the acquisition.

Another big change among the top 10 companies is General Electric's drop from seventh to 12th place. GE no longer has a materials business that is a separate reporting segment. Instead, GE Plastics is a division of another reporting segment. In the process, some nonchemical businesses have been shaken out of the company's results, and the resulting revenues figure is smaller than it had been in previous years.

The top 10 companies came close to having another addition this year. Innovene, the former olefins and derivatives business of BP, was planning an initial public offering as an independent company that would have been headquartered in Chicago. By C&EN's reckoning, that would have made the company an American, not a British, firm. But the December purchase of Innovene by U.K.-based Ineos foiled the IPO and the company's place in C&EN's ranking. The company might have placed fourth or fifth in this year's ranking, assuming there would have been some organic growth above the company's $17.9 billion in 2004 revenues.

In addition to Equistar and Millennium, four companies that have made the ranking in previous years didn't show up in 2006. Resolution Performance Products merged with Borden Chemical to form Hexion Specialty Chemicals, which appears on this year's list at number 15. Great Lakes Chemical merged with Crompton to form Chemtura, on the list at number 22. Goodyear Tire & Rubber no longer reports chemical results. And Sterling Chemicals didn't have enough sales to make this year's ranking.

These companies have been replaced by many new additions. CF Industries is now a publicly traded fertilizer company and returns to the list at number 36 after an absence last year. Sigma-Aldrich, Kraton Polymers, and Phelps Dodge, which occasionally make the ranking, come in at numbers 46, 47, and 50, respectively. Texas Petrochemicals debuts in 48th place. And Arsenal Capital, which last year purchased Reilly Industries and Velsicol Chemical, makes the list at number 49.

C&EN's ranking of the U.S. operations of foreign-owned firms saw few changes this year. Every company on the list last year reappears this year, and the positions of the top five companies are unchanged.

Heading the foreign list again this year is BASF, with $11.9 billion in sales. Its 16.9% sales growth gave it a little more elbow room at the top of the list this year versus number two Shell Chemical.

One significant change to the foreign ranking this year is the climb of Lanxess, formerly the industrial chemicals arm of Bayer, from number 15 to number nine. Another is Rhodia's drop from 14th to 20th place. Basell, which Shell and BASF sold to Access Industries last year, nearly made the foreign list this year but didn't report a full year of 2005 results.

So far, the significant changes to next year's ranking are shaping up to be minimal. BASF is trying to take over Engelhard but has been rebuffed so far. Huntsman Corp. is planning to split itself in two. And Linde is buying BOC, a deal that could lead to a potential change in the foreign rankings. But there are nearly eight months to go for this picture to change.


Compiling The Top 50

Table: Another Good Year
Profits for the U.S. chemical producers were even stronger in 2006 than they were in 2004

Table: All The Rankings
Top 50 U.S. producers in terms of chemical sales, operating profits, assets, and profitability

Table: Stability At The Top
Rankings of foreign-owned chemical companies have changed little from a year ago

Tables are available as PDF files.

Chemical & Engineering News
ISSN 0009-2347
Copyright © 2010 American Chemical Society


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