Olin earnings tumble on weak demand, maintenance outages

MOSCOW (MRC) -- Olin Corporation (Clayton, Missouri) reports a second-quarter net loss of USD120 million, down from a net loss of USD20 million in the year-ago quarter, reflecting weak demand and maintenance outages on the chemical side, reorted Chemweek.

Adjusted EBITDA totaled USD71.5 million versus USD205 million in the year-ago period. Sales totaled USD1.241 billion, down 22% year-over-year (YOY) from USD1.593 billion.

Adjusted earnings per share came to a 60-cent loss, down from breakeven in the year-ago period and short of the average analyst estimate of a 49-cent loss as compiled by Refinitiv (New York).

“Second quarter 2020 sales for the combined chlor-alkali products and vinyls and epoxy businesses declined year-over-year by approximately 27%,” says John E. Fischer, chairman, president, and CEO. “The sales decline reflects weaker customer demand and a high level of planned maintenance turnaround activity which occurred early in the second quarter. Overall chemical businesses sales increased each month during the quarter from the April low point and have continued to increase during July.”

Fischer expects third-quarter adjusted EBITDA to double that of the second quarter owing to lower maintenance turnaround costs, improved sales volumes, and higher product pricing.

Chlor-alkali products and vinyls sales totaled USD651 million, down 28% YOY from USD909 million. Segment earnings came to a USD57 million loss, swinging from profit of USD71 million in the year-ago period. Fischer cites weaker broad-based customer demand from almost all end-use chemical customers. “Shipments to our urethane customers were particularly weak and declined by approximately 44% compared to first quarter 2020,” he says. Caustic soda pricing increased sequentially by about 8%, while ethylene dichloride pricing declined sequentially by about 50%. Olin expects pricing to improve during the third quarter, and for volume to increase owing to lower maintenance turnaround activity.

Epoxy segment sales totaled USD397 million, down 24% YOY from USD519 million, mainly on roughly 30% lower epoxy resin volume and lower product prices. The segment recorded a loss of USD13 million compared to earnings of USD4 million in the year-ago period. Lower product prices and lower epoxy resin volumes were partially offset by lower raw material costs, primarily benzene and propylene, and lower operating costs, says the company.

The Winchester ammunition segment turned in sales of USD193 million, up 17% YOY from USD165 million on higher commercial ammunition sales. Segment earnings were USD16 million, up from USD10 million in the year-ago period, mainly on higher commercial ammunition volumes and pricing.

As MRC informed earlier, in December 2019, Olin Corporation announced that it plans to permanently shut down a chlor alkali plant with a capacity of 230,000 tons and its Vinylidene Chloride (VDC) production facility, both in Freeport, Texas. These closures are expected to be completed before the end of 2020.

As MRC also reported before, May production of sodium hydroxide (caustic soda) in Russia was 112,000 tonnes (100% of the basic substance) versus 101,000 tonnes a month earlier. Overall output of caustic soda totalled 543,000 tonnes in the first five months of 2020, up by 1.4% year on year.

Construction of SCG Long Son petchems project nears halfway

MOSCOW (MRC) -- SCG has no plans to delay development projects, including the Long Son Petrochemicals complex in Vietnam, with construction 45% complete, reported Chemweek.

The project is worth USD5.4 billion.

The start-up of Vietnam's first fully integrated petchems facility is scheduled for 2023.

Thammasak Sethaudom, vice-president of finance and investment as well as chief financial officer, said the company maintains its total investment budget of 55-65 billion baht in 2020.

SCG hopes the government's key development projects like the Eastern Economic Corridor scheme as well as the economic rehabilitation plans will boost the domestic economy and investment sentiment in the second half this year.

As MRC wrote previously, SCG Plastics, part of SCG, took its high density polyethylene (HDPE) plant off-stream for a maintenance turnaround on November 26, 2019. It remained under maintenance until December 14, 2019. Located in Map Ta Phut, Thailand, the plant has a production capacity of 200,000 mt/year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Advanced Petrochemical Q2 net profit falls

MOSCOW (MRC) -- Advanced Petrochemical's net profit fell in the second quarter amid a drop in polypropylene (PP) prices, the Saudi Arabia-based producer said, said Mubasher.

The net profits of Advanced Petrochemical Company amounted to SAR 154.95 million in the second quarter (Q2) of the year, 19.43% less than SAR 192.31 million in the same quarter in the previous year.

The decline in the interim earnings was mainly driven by lower sales prices of Polypropylene by 26.7% and higher consumption of outsourced Propylene by 19.9%, according to a bourse disclosure on Wednesday.

This drop came despite the increase in Polypropylene sales volume by 4% and the decrease in Propane and outsourced Propylene prices by 45.7% and 24.9% respectively. Moreover, the firm’s general and administrative expenses, and financial charges slumped by 20.2% and 93.5%, respectively.

Additionally, revenue dropped by 23.8% to stand at SAR 519.03 million in the three-month period ended 30 June 2020, compared with SAR 680.96 million in the year-ago period.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Advanced Petrochemical Company (before Advanced Polypropylene) is a Saudi Joint Stock Company, established in October 2005. The company was initially launched by National Polypropylene Limited, jointly owned by Mr. Khalifa Al Mulhim, the chief executive officer of Advanced, and Mr. Monther Laheeq, who negotiated all the main deals related to the project, either before or after the establishment of Advanced Petrochemical. Currently, National Polypropylene Limited controls 7.9% of Advanced Petrochemical. Advanced Petrochemical started the construction of its plants in May 2005. The company produces 455,000 tons per year of propylene and 450,000 tons per year of polypropylene from its production facility located in Jubail Industrial City, in the Eastern coast of the Kingdom of Saudi Arabia.


Bayer swings to USD11.3-billion net loss on litigation charges

MOSCOW (MRC) -- Bayer swung to a second-quarter net loss of EUR9.55 billion (USD11.27 billion) from a net profit of EUR404 million in the year-earlier quarter on special charges of EUR12.51 billion comprising mainly provisions for agreements reached in legacy Monsanto litigation in the US related to glyphosate and dicamba herbicides, and polychlorinated biphenyls. Other special charges resulted from litigation in pharmaceuticals and the company’s ongoing restructuring program, reported Chemweek.

Bayer’s EBITDA before special items rose by 5.6% year on year (YOY) in the second quarter to EUR2.88 billion, net of EUR12 million in negative currency effects, beating analysts’ consensus estimate by 5%. Sales declined by 2.5% on a currency- and portfolio-adjusted basis to EUR10.05 billion and the special charges drove EBIT down to a negative EUR10.78 billion from a positive EUR785 million in the year-earlier period. Bayer, meanwhile, has downgraded its full-year outlook due to the impacts of the COVID-19 pandemic.

Free cash flow amounted to EUR1.40 billion in the second quarter, up from EUR751 million a year earlier. Net debt increased by 1.7% compared with 31 March 2020, to EUR35.99 billion as of 30 June 2020.

Bayer’s businesses delivered a solid performance in the quarter despite COVID-19 and the associated uncertainties, says chairman Werner Baumann. “Thanks to the growth in our agricultural business, we raised EBITDA before special items, and we did so in a challenging environment,” Baumann says. Sales in the pharmaceuticals and consumer health divisions receded, however.

Baumann says that Bayer is taking the necessary steps to safeguard the continuity of its business operations in the current challenging times and ensure reliable supplies of its products and services to hospitals, physicians, patients, consumers, and farmers.

Bayer says it has downgraded its full-year guidance, made in February, because the financial impact of the COVID-19 pandemic remains difficult to predict. Bayer now forecasts currency-adjusted 2020 sales of EUR43–44 billion, down from previous guidance of EUR44–45 billion, or an increase of 0–1% compared with a previous forecast for growth of about 3–4% on a currency- and portfolio-adjusted basis. Bayer has maintained its target of an increase in its EBITDA margin before special items to about 28% on a currency-adjusted basis, which would correspond to EBITDA before special items of about EUR12.1 billion, down from previous guidance of EUR12.3–12.6 billion on a currency-adjusted basis.

Bayer says it anticipates substantial negative currency effects this year, primarily due to the depreciation of the Brazilian currency. Based on 30 June exchange rates, this could push full-year sales down to €42–43 billion, the company says.

Taking into account the financing of the litigation payments, Bayer now expects to reduce net debt to about EUR33 billion this year, compared with a previous expectation of EUR27 billion.

As MRC wrote before, Covestro has closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc.

According to MRC's ScanPlast report, Russia's overall estimated consumption of PC granules totalled 47,300 tonnes in the first two quarters of 2020 (excluding imports and exports to/from Belarus), compared to 40,700 tonnes a year earlier. Demand increased by 16% year on year.

Vinmar partners with Agilis on digitalization strategy

MOSCOW (MRC) -- Vinmar International, a global marketing and distribution company for petrochemicals and plastics, will partner with Agilis Chemicals to help execute on its digitalization strategy, according to Chemweek.

Agilis - which offers a cloud-based software solution to build branded portals for producers and distributors - will design, develop, and deploy digital solutions for Vinmar.

“We work closely with our petrochemical suppliers to develop tailored business solutions and marketing programs that work for them," said Vishal Goradia, Vinmar senior vp. "The partnership with Agilis will allow us to continue to execute on this commitment and to accelerate and drive our digitalization strategy.”

The effort will allow Vinmar to streamline operations and increase efficiency while maintaining high data privacy and security standards. “Vinmar has a set of complex business challenges, and we are excited about working with them," said Jay Bhatia, Agilis founder and CEO. "The chemical distribution market is only at the beginning stages of a digital transformation journey."

As MRC reported earlier, Vinmar Polymers America will distribute Lanxess Corp.'s high-performance plastics to customers in North America. Thus, VPA, a unit of Houston-based Vinmar International, and Lanxess of Pittsburgh will work together to complement Lanxess' market strategy with regionally placed inventory, along with sales and technical support, officials said in a Jan. 17, 2020, news release.

Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year. June production of polymers in primary form fell to 791,000 tonnes from 820,000 tonnes in May partially because of a scheduled shutdown for maintenance at ZapSibNeftekhim. Output of polymers in primary form totalled 4,900,000 tonnes over the stated period, up by 14.8% year on year.

Vinmar is a global marketing and distribution company that brings value to the world’s leading producers and users of plastics and chemicals through the supply of best in class products and tailored business solutions. With over 40 years of experience and success, Vinmar has grown into one of the world’s largest plastics and chemicals marketing and distribution companies. The company has over 50 offices in more than 35 countries with sales in excess of 110 countries. Among other petrochemical products, the company produces polyethylene , polypropylene, polyvinyl chloride, polyethylene terephthalate and polystyrene.