Osaka Soda posts improved revenue across businesses

Osaka Soda Ltd. reported sales of Yen76.6 billion (USD505.7 million) for the fiscal first nine months ended Dec. 31, higher by 6.3% year over year. Net profit was at Yen7.9 billion, up by 49.9% year over year, as per Chemweek.

Net sales in the company’s basic chemicals business unit increased by 3.3% year over year to Yen28.1 billion. The company said the sales volume of chlor-alkali products increased due to lower negative impact caused by the manufacturing equipment problems at its plant in Mizushima, Japan. However, sales decreased due in part to unit sales price adjustments following the decline in raw material and fuel prices. Although epichlorohydrin (ECH) was affected by the softening of overseas market conditions, net sales increased due to lower negative impact caused by manufacturing equipment problems and an improved volume, it added.

Revenue in Osaka Soda’s functional chemicals sector totaled Yen23.1 billion, higher by 8% year over year. In the synthetic rubber business, net sales decreased, as not only were sales of ECH rubber affected by the decline in automobile production in Europe and Asia, but there was also the impact of the increase in debottlenecking work for acrylic rubber, said the company. Sales in fiscal first nine months of diallyl phthalate (DAP) resin increased due to new adoption for UV ink applications. It also reported increased sales of allyl ethers due to strong demand for silane coupling agents in China, particularly for paint applications.

The company’s healthcare business reported higher sales of pharmaceutical purification materials as demand steadily increased for applications in diabetes treatments in Europe, the Americas and Asia. It recorded weaker sales of active pharma ingredients (API) and their intermediates. Sales in this sector stood at Yen9.8 billion, up 20% year over year.

In Osaka Soda’s trading and other unit, the company recorded demand recovery for electronic materials and automotive products, mainly glass fiber. Sales stood at Yen13.5 billion, up 1.3% year over year.

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Ester Industries swings to profit on improved revenue

Ester Industries Ltd. (Gurgaon, India) reported a 29% year-over-year rise in revenue to 3.5 billion Indian rupees (USD39.9 million) in the fiscal third quarter ended Dec. 31, as per Chemweek.

The company recorded a profit of 250 million rupees, swinging from a net loss of 450 million rupees in the corresponding period of the previous year.

Revenue in the company’s specialty polymer business stood at 340 million rupees, up 55% year over year. Its EBIT grew significantly to 100 million rupees, from 2 million rupees in the year-earlier period. Fiscal-third quarter sales volume more than doubled to 1,155 metric tons from 558 metric tons a year earlier. The unit produces polyethylene terephthalate masterbatches.

Revenue in the polyester films business was 32% year over year higher at 2.4 billion rupees, and the unit reported EBIT profit of 400 million rupees, swinging from a net loss of 30 million rupees. Sales volume was 13,530 metric tons, up 9.9% year over year.

The company’s affiliate Ester Filmtech Ltd., a producer of biaxially-oriented polyethylene terephthalate (BOPET), reported revenue of 900 million rupees, and its EBIT was 80 million rupees. Sales volume were 6,698 metric tons. The company did not give comparative figures for the previous-year period.

Ester’s other business unit is packing (BOPET) film business.

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Elliot Management renews push for breakup of Phillips 66

Activist investor Elliott Management has increased its stake in Phillips 66 (Houston) and issued a new call to streamline the company’s portfolio by spinning off its midstream business and selling its stake in Chevron Phillips Chemical (CPChem; The Woodlands, Texas), a 50/50 joint venture with Chevron, as per Chemweek.

“Phillips today trades at a substantial discount to a sum-of-its-parts valuation, and investors have plainly lost confidence in the Company's ability to unlock this value under its current structure,” Elliot stated in a Feb. 11 letter to the Phillips 66 board of directors.

In a press release, Elliott revealed that it has increased its stake in Phillips 66, formerly about 2%, to about $2.5 billion, or about 5%, making it one of the company’s top five investors.

Elliot originally made its case for a change of direction at Phillips 66 in a letter to the board sent in November 2023.

“Investors were hopeful the company would finally take the necessary actions to improve its operations and realize the significant potential of its underappreciated assets,” Elliot said in the press release. “Unfortunately, this progress has failed to materialize, and it has become evident that urgent changes are needed.”

In the new letter to the board, Elliot said Phillips 66 had “abandoned serious collaboration on board and corporate governance improvements by failing to honor its commitment to add a second director and reverting to a combined CEO-chairman role.”

Elliott’s recommendations to Phillips 66 include portfolio simplification, an operating review and enhanced oversight. “A streamlined Phillips would include the sale or spinoff of the midstream business, the sale of the company’s interests in CPChem and the sale of the JET retail operations in Germany and Austria,” the letter said.

Phillips 66 said it will review Elliott’s recommendations. “The board and management team regularly review the company’s strategic direction and progress toward achieving our objectives, consistent with maximizing shareholder value, and welcome the perspectives of all shareholders,” said a company spokesperson said in a statement. “Phillips 66 is on the right path, and we are realizing our vision of being the leading integrated downstream energy provider.”

The sell-off of Phillips 66’s midstream assets, which include CPChem and DCP Midstream, could create some logistical issues. Phillips 66 has worked to integrate its petrochemicals and NGLs into its refining operations as one of its strategies to improve operational performance.

“We see a potential spin of the midstream business as outlined by Elliott as negative for the credit profile of the remaining refining business, all else equal,” wrote Jeremy Tonet, an analyst with JP Morgan in a research note.

Tonet highlighted the value of more diversified refiners like Marathon Petroleum and Phillips 66 to pure-play refiners for cash generation in riding out refining margin cycles. “Diversifying cash flow streams away from refining, which can be extremely cyclical in nature at times, was a credit positive in our view,” he wrote.

In refining, Phillips 66 has focused on smaller, low-cost, quick-hit refinery projects to improve margins, margin capture and reliability. During the fourth-quarter earnings call on Jan. 31, the company said that over the past four quarters, its refineries operated at crude utilization rates above industry standards while it reduced operating costs and increased margins. The company reached its goal of reducing refinery operating costs by $1/b by the end of 2024.

“We do believe Phillips 66 has shifted its focus in recent years back towards refining operations and continues to pursue reliability and capture initiatives that could help close the gap from here, while Elliott appears to be pushing for additional board oversight and a review of management to achieve this goal,” wrote John Royall, JPMorgan analyst in a research note.

According to Elliott Management’s letter, Phillips 66 shareholders have been punished for waiting for the company to act fully upon its earlier recommendations, which included adding two board members with refining experience.

“Phillips has failed to make meaningful progress on its targets,” said Elliott Management’s letter. “And despite possessing valuable assets and a clear, achievable path to realizing their full potential, Phillips’ total shareholder return has continued to disappoint, lagging well behind peers. Over the past decade, Phillips has underperformed Valero by 138% and Marathon by 188%.”

In its statement, Phillips 66 said it is progressing toward its goals. “Our 2024 results reflect our continued strong operating performance and success in achieving the strategic commitments we communicated in 2022 and 2023. With these goals achieved and exceeded, we have set targets for our next phase through 2027, which are designed to drive even greater long-term shareholder value through strong operating performance and disciplined capital allocation.”

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Coca-Cola considers increasing plastic use in USA

Coca-Cola is considering increasing the production of its drink in plastic bottles, as per BBC.

The company made this statement after US President Donald Trump signed an executive order raising tariff rates on all steel and aluminum imports to the country from 10% to 25%. The decision comes into effect in March 2025.

Coca-Cola imports aluminum for cans from Canada, and therefore will be forced to find ways to address the problem of rising prices, The Guardian reported. "If aluminum cans become more expensive, we can pay more attention to plastic bottles," CEO James Quincey told shareholders.

We remind, the US government lifted bans on disposable straws and plastic products and ordered the development of a national strategy to return to plastic straws across the country. And in December 2024, Coca-Cola postponed and reduced its targets for the use of recycled materials.

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Pressure mounts on UK chemical industry as sales slump

The latest business survey of members of the Chemical Industries Association (CIA; London) shows that 60% of UK chemical businesses reported falling sales with a further 20% seeing no growth, as per Chemweek.

The fourth-quarter 2024 survey results are “more worrying news amidst a number of recent closure and strategic review announcements,” the CIA said. The association also noted challenges associated with current UK government policy, particularly its energy-transition agenda.

Every chemical business across the UK is paying more for its energy than competitors elsewhere – as much as 400% higher than in the US – with the added challenge of a “hugely ambitious net-zero transition timeline and hostile policy agenda,” according to the CIA. For certain parts of the UK chemical industry, the increasing lack of competitiveness is not sustainable, with announcements of site closures and strategic reviews on the rise, it said.

“All of this leaves our ability to deliver essential materials for our country’s critical national infrastructure — be it energy, health, food or defense — increasingly at risk, not to mention our key value-chain role in underpinning other growth sectors such as aerospace and automotive,” the CIA said.

Urgent action is needed to address these unsustainable costs and “unsupportive” policies, if the government wants to maintain a chemical industry in the UK, the CIA said.

“We are experiencing the most challenging of times in terms of uncompetitive input costs, suppressed demand and, it has to be said, a manufacturing-unfriendly policy and regulatory environment. All with no immediate end in sight,” said Steve Elliott, chief executive of the CIA.

Michela Borra, head of economics at the CIA, highlighted data released recently by the UK Office for National Statistics showing that the country’s chemical output has reached the lowest level in more than a decade. “This coupled with expectations of worsening on the energy and labor cost side indicates another challenging year for our members,” she said. “Our survey has also highlighted that the main three current challenges for businesses are the cost of energy and labor, alongside weakening demand, with less than 10% of companies expecting these conditions to ease through 2025.”

Elliott welcomed government policies that aim to address some of the UK’s longer-term infrastructure needs but stressed that “meaningful action” is needed immediately “to enable chemical businesses across the UK to play their essential role in driving much needed economic growth.”

The most recent UK plant closures include Ineos Group Ltd.’s ethanol facility at Grangemouth, Tata Chemicals Europe Ltd.’s sodium bicarbonate unit at Lostock and Yara International ASA’s ammonia facility at Hull.

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