Materials firms hit hard in financial results

Detroit, Michigan - The financial impact of Covid-19 is being felt at public firms across the US-based polymer industry.

Several public firms announced first-quarter results in 30 April and 1 May, with many reporting lower sales and profit totals because of the impact of the pandemic.

The outbreak has constrained economic activity as many businesses have closed and consumers have stayed home to prevent spreading the virus. As of 30 April, more than 230,000 people have died from Covid-19 around the world.

First-quarter sales at global resin and compounding leader LyondellBasell Industries were down 15% to $7.5 billion (€6.8 billion), with profit tumbling 82% to $144 million. The firm, based in Houston and London, said on 1 May that it was reducing capital expenditures in 2020 by $500 million.

"We are navigating through these challenging times by finding benefits from our core strengths in operational excellence, cost management and capital discipline," CEO Bob Patel said in a news release. "Our significant global feedstock flexibility serves us well during periods of volatile raw material prices."

LBI already has temporarily closed several small compounding plants — part of its Advanced Polymer Solutions unit — because of the Covid-19 impact. Patel said that about one-third of that unit's demand comes from the automotive sector, which has been strongly impacted by the crisis.

Sales for the first quarter were down 6% to a little more than $2.2 billion at Eastman Chemical Co., a maker of specialty materials, including Tritan-brand copolyester, based in Kingsport, Tennessee.

"The impact of the Covid-19 global pandemic has resulted in unprecedented challenges as we move forward," Chairman and CEO Mark Costa said in a news release. "I'm proud of how we have responded by taking actions to keep our employees safe and maintain the operational integrity of our manufacturing facilities."

Huntsman Corp., a producer of polyurethanes and speciality materials in The Woodlands, Texas, reported sales down 4.5% to a little less than $1.6 billion, with adjusted net income down 23% to $65 million. The firm also is reducing capital spending for 2020 by $90 million.

"Our company is ready and able to take advantage of opportunities to come, and I am confident that Huntsman will emerge from this global crisis a stronger company," Chairman, CEO and President Peter Huntsman said.

Kraton Corp., Houston-based supplier of styrenic block copolymers, saw sales decline 6% to $427 million, with consolidated net income more than doubling to $34 million, even after deducting income from the sale of its Cariflex isoprene rubber business.

"Our dedicated colleagues continue to keep our global business fully operational, supplying customers in all regions, in many cases with chemical and polymer raw materials essential to slow the spread of the virus," President and CEO Kevin Fogarty said.

The stock prices of many public firms have been battered by the crisis, with plastics and chemicals firms faring worse than the overall market.

Between 1 Jan and early trading 1 May, per-share prices at LBI and Kraton each were down just over 40%. Per-share prices at Huntsman were down just over 30% and at Eastman were down just over 20% in the same comparison.

In that same time frame, the Dow Jones Industrial Average was down over 16% and the broader S&P 500 was down almost 12%.