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Wall Street analysts cut profit estimates for chemical companies for the 4th quarter and the full-year 2012

October 13/2011

(ICIS) -- Wall Street analysts on Wednesday cut profit estimates for US chemical companies for the fourth quarter and the full-year 2012, amid slowing global economic growth, weaker demand and lower margins. The latest round of profit forecast reductions come from US-based investment banks Well Fargo and JP Morgan.


УWe are of the belief that third quarter earnings will hold up relatively well across chemicals Ц up more than 20% year on year Ц but see some downside risk to fourth quarter estimates as near-term industry dynamics (lower oil, higher ethane) and cautious purchasing behaviour are impacting olefin margins,Ф said Wells Fargo analyst Frank Mitsch in a research note.


The analyst lowered profit forecasts for Netherlands-based LyondellBasell and US-based companies Georgia Gulf and Westlake Chemical. For LyondellBasell, Mitsch took down his third quarter 2011 earnings per share estimate by 5 cents to $1.30, and his fourth quarter estimate by 20 cents to 83 cents, leading to full year 2011 earnings per share of $4.85. He also cut his 2012 forecast by 25 cents to $4.85.


The analyst reduced his fourth quarter earnings per share estimate on Georgia Gulf by 10 cents to 36 cents on weaker expected aromatics results. Mitsch expects the company to earn $2.10/share in 2011 and $2.25/share in 2012.


For Westlake, the analyst cut his fourth quarter estimate by 10 cents to 84 cents/share, leading to overall 2011 earnings per share of $4.40. For 2012, he also cut his forecast by 35 cents to $4.40.
The analyst said temporary market dislocations have compressed olefin margins, which could face pressure through the end of the year.


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Tags:ethylene, LyondellBasell.
Category:General News
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