Moody's downgrades AkzoNobel to Baa2, stable outlook

Moody’s has downgraded its credit rating for AkzoNobel as a result of high leverage and the amount of time expected for debt to substantially fall, the agency said.

The firm downgraded its rating for AkzoNobel’s debt from Baa1 to Baa2, citing the levels of debt to earnings the company reached last year as a result of acquisition costs and “generous” share buy-back programmes amid lower volumes and higher costs.

Moody’s is the latest agency to downgrade Akzo’s debt rating, following Fitch cutting its rating for the company to BBB from BBB+ on the back of higher debt to earnings levels.

AkzoNobel estimated that its leverage rose to 3.8 times earnings before interest, taxes, depreciation and amortisation (EBITDA) in 2022, following the buy-backs and its acquisition of Latin America-focused coatings player Grupa Orbis.

The company is still working to complete its purchase of Kansai Paints Africa, expected to be a significant factor behind an anticipated EUR500m of cash-outs in the second half of 2023.

We remind, AkzoNobel has completed the acquisition of the wheel liquid coatings business of Lankwitzer Lackfabrik GmbH, a deal which strengthens the company’s performance coatings portfolio. The acquired business will complement AkzoNobel’s existing powder coatings offering and expand the range of innovative products the company supplies.

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Fluor has been awarded a reimbursable contract by Dow to provide front-end engineering and design (FEED) and engineering, procurement and construction management (EPCM) services for the world’s first net-zero carbon emissions (scope 1 and 2 carbon dioxide emissions) ethylene cracker and derivatives complex in Fort Saskatchewan, Alberta, Canada, said the company.

Fluor will book the initial FEED award in the first quarter and anticipates the additional EPCM scope will be awarded throughout 2023 pending a final investment decision by Dow’s Board of Directors.

“We commend Dow for its leadership and commitment to decarbonize its global footprint, and we are pleased to work together with the company on this important project,” said Jim Breuer, group president, Fluor’s Energy Solutions business. “Fluor’s expertise in energy transition is helping clients across industries reduce greenhouse gas emissions and improve energy efficiency.”

Dow’s net-zero emissions ethylene cracker and derivatives complex, which is subject to approval by Dow’s Board of Directors and various regulatory agencies, would decarbonize approximately 20 percent of its global ethylene capacity while growing its polyethylene supply by about 15 percent and supporting approximately USD1 B of EBITDA (earnings before interest, taxes, depreciation and amortization) growth across the value chain by 2030.

The additional project scope to be awarded in 2023 includes integrated project management team services for the entire Fort Saskatchewan Path2Zero program and EPCM services for the ethane cracker and associated utilities, power and infrastructure.

We remind, Dow intends to construct the sector's first net-zero carbon emissions ethylene and derivatives complex with respect to scope 1 and 2 carbon dioxide (CO2) emissions, at its Fort Saskatchewan (Alberta, Canada) site. The project involves a new 'net-zero carbon emissions' ethylene cracker at the site, set for launching by 2027. It would expand Dow's ethylene and polyethylene capacity by over 200% from its Fort Saskatchewan site, while retrofitting the site's existing assets to net-zero carbon emissions.

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AdvanSix’s Q4 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 28.1% year on year, to USD66.6m, on higher market-based pricing and the favourable year-on-year impact of planned turnarounds, said the company.

These positive drivers were partially offset by a 15% decline in sales volume due to soft end-market demand and customer destocking, as well a lower operational performance, the company said.

While sales fell, total costs and expenses fell at a sharper pace. The adjusted EBITDA margin rose to 16.5%, from 12.3% in Q4 2021.

We remind, AdvanSix’s Q3 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 57% year on year. Despite the 18% decline in volumes, sales rose 7% as market-based pricing was favorable, driven by higher pricing across the company’s ammonium sulphate and nylon product lines. Raw material pass-through pricing was favourable by 4%, following a net cost increase in benzene and propylene, both inputs to cumene, which is a key feedstock for the company's products.

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NextChem and its subsidiary MyRechemical have signed an agreement with Dutch joint venture Dimeta to explore opportunities to produce low-carbon renewable and recycled carbon dimethyl ether (DME) from waste for use in LPG, said the company.

DME is similar to propane and can be blended with LPG without requiring changes to appliances or infrastructure, offering a low-carbon solution to LPG’s use in energy and transportation.

Dimeta plans to produce 3,00,000 tons of DME by 2027 through plants in the US, UK and Europe. The companies will work together to produce DME from municipal solid waste and explore other opportunities, including biogas and biomethane.

Renewable and recycled carbon DME can be produced from biogenic and non-biogenic feedstocks, such as biogas, cellulosic material and municipal waste. Its applications include blending up to 20% with renewable propane in off-grid heating, cooking and industrial applications, using as a 100% renewable fuel in high temperature heating that is hard to electrify, and as a replacement for diesel in engines with only a retrofit required. DME can also be blended up to 20% into propane for use in existing propane-fuelled vehicles.

We remind, NextChem has signed an agreement with Netherlands-headquartered energy firm Dimeta to develop plants for renewable and recycled carbon dimethyl ether (DME) from waste. DME has similar properties to liquefied petroleum gas (LPG), and the recycled material can be blended with conventional LPG to help reduce its carbon footprint without needing to change appliances or infrastructure.

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Johnson Matthey (JM) and bp announced that their co-developed, award-winning Fischer Tropsch (FT) CANS technology has been selected by Strategic Biofuels for their project which aims to produce the world’s lowest carbon footprint liquid fuel, said the company.

The technology has been licensed to Strategic Biofuels, a leader in developing negative carbon footprint biofuels plants, for the company’s Louisiana Green Fuels project (LGF) in Caldwell Parish, Louisiana. Located on a 327-acre site at the Port of Columbia, the LGF plant plans to convert 1 MMt of forestry waste feedstock into cleaner-burning renewable diesel and is projected to produce 31.8 MMgpy of biofuels once in operation. The aim is to increase production to over 165 MMgpy of renewable diesel and sustainable aviation fuels (SAFs) over 10 to 12 years.

The LGF plant currently aims to be operational by early 2027 and is expected to produce about 87% renewable diesel and 13% bionaphtha. The renewable diesel could be used as a blend component in conventional diesel or as a 100% paraffinic diesel finished fuel and the bionaphtha can be blended into the gasoline pool.

Strategic Biofuels is planning to utilize carbon capture and sequestration (CCS) technology at its LGF plant to further drive down carbon emissions. This technology captures and stores carbon dioxide formed in the process so that it is not emitted into the atmosphere. With the use of this technology, the Carbon Intensity (CI) of the LGF project, according to Life Cycle Associates, a leading analytical firm for the California Air Resources Board, would score at minus 294 (-294 gCO2e/MJ).

FT CANS technology, which will be leveraged at the LGF plant, was jointly developed by bp and Johnson Matthey to deliver environmental and operational benefits. It converts synthesis gas (syngas), generated from sources such as industrial emissions, direct air capture, municipal solid waste or other biomass, into long-chain hydrocarbons suitable for the production of renewable diesel and sustainable aviation fuels.

In 2022, JM announced its refreshed strategy with an ambition to be the number one player across the syngas value chain, targeting an addressable market of up to ?12 billion by 2030. As a large-scale project, this licence to Strategic Biofuels hits one of JM’s key strategic milestones.

We remind, BP PLC on Wednesday revealed plans to evaluate the construction of an ammonia cracker in Wilhelmshaven, Germany and utilize repurposed oil/gas facilities to transport hydrogen. The project, which would be located in Wilhelmshaven, is expected to include an industry leading ammonia cracker which could provide up to 130,000 tons of low-carbon hydrogen from green ammonia, per year, from 2028.

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