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(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.
“We are of the belief that third quarter earnings will hold up relatively
well across chemicals – up more than 20% year on year – 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,”
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.
mrcplast.com
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