MOSCOW (MRC) -- Stepan reports second-quarter net income if USD35.8 million, 18.6% higher year-on-year (YOY), as strong demand for cleaning and disinfectant products due to COVID-19 more than offset weakness in construction and oilfield markets, said Chemweek.
Adjusted earnings of USD1.65/share was 10.0% higher YOY and handily beat the analysts’ consensus estimate of USD1.20/share, as reported by Refinitiv (New York). Net sales decreased 2.6% YOY, to USD460.5 million.
Surfactant operating income increased 51% YOY, to USD48.5 million, on sales up 6%, to USD332.3 million. The increase was primarily attributable to a 10% increase in global Surfactant volume and an improved product mix. The sales volume growth was principally due to higher demand in the global consumer product end markets driven by increased demand cleaning and disinfection products as a result of COVID-19, and a USD5.0 million operating income improvement in Mexico.
Polymer operating income fell 32% YOY, to USD15.5 million, on sales down 20%, to USD112.4 million. This decrease was mostly attributable to a 13% decline in sales volume versus prior year. Global rigid polyol sales volume declined 8% driven by Europe and North America, due to COVID-19 construction project delays and cancellations, partially offset by strong growth in China. Lower volume and higher raw material inventory cost within the phthalic anhydride business also contributed to the decline in operating income versus the prior year.
Specialty Product operating income fell 46% YOY, to USD3.2 million, on sales down 17%, to USD15.8 million. This decrease was primarily attributable to order timing differences in Stepan’s food and flavor business and lower margins within its medium chain triglycerides product line.
"2020 will continue to be a difficult year for the world, our country and our industry. We believe Stepan's business remains better positioned to perform than most as we demonstrated in the second quarter. Our teams are working to minimize vulnerabilities and capture opportunities that are available to us," said F. Quinn Stepan, Jr., Chairman, President and CEO. "We believe our Surfactant volume in the consumer product end markets should remain strong as a result of heightened demand for disinfection, cleaning and personal wash products. We anticipate that demand for surfactants within the agricultural market will approximate last year and that the oilfield market will remain down for the balance of 2020. Although the long-term prospects for our Polymer business remain attractive as energy conservation efforts and more stringent building codes should increase demand, we believe the business will be challenged in the short term as re-roofing and new construction projects continue to be deferred or canceled."
As MRC informed earlier, Stepan Co. says that, through subsidiaries in Mexico, it has entered into an agreement with Clariant (Mexico) to acquire Clariant's anionic surfactant business and associated sulfation equipment at Santa Clara, Mexico. The transaction is expected to close in the third quarter of 2020, subject to regulatory approvals and satisfaction of certain other requirements. Financial terms of the transaction were not disclosed.
Besides, in May 2020, Clariant’s CATOFIN catalysts was selected by Advanced Global Investment Co. (AGIC), a joint venture between Advanced Petrochemical Company (APC) and SK Group, to build a PDH facility in the Middle East.
Propylene is the main feedstock for the production of polypropylene (PP).
According to MRC's ScanPlast report, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.