AkzoNobel reports paints profits up in Q2

MOSCOW (MRC) -- The world's top paint maker AkzoNobel on Wednesday posted net profit up 11% in the second quarter of 2014, despite a sales drop blamed on unfavourable exchange rates, said the producer in its press release.

The Dutch-Swedish group made 205 million euros (USD276 million) in net profit, "mainly due to higher operating income," a statement said.

Turnover was nevertheless down 4% year-on-year at 3.71 billion euros, "mainly due to five percent adverse currency effects," including a strong euro.

Paint is used throughout industry, as well as being a household purchase, and so is regarded as a broad barometer of underlying economic activity.

As MRC wrote before, Akzo Nobel's first-quarter net profit was up 45% on lower financing costs, while revenue fell 2% because of currency losses and despite higher volumes in all of its businesses. Net profit for the first three months of the year was EUR129 million (EUR178 million) compared with EUR89 million a year earlier.

Formed in 1994 in a merger between Akzo and Nobel, the group employs 50,000 people worldwide and counts Dulux and Trimetal among its brands. Akzo Nobel N.V., trading as AkzoNobel, is a Dutch multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 55,000 people.
MRC

MOSCOW (MRC) -- Quarterly operating earnings at BASF, the world's largest chemicals company by sales, rose slightly less than expected, as a strong euro lowered the value of overseas sales, as per the company's press release.

Second-quarter earnings before interest and tax (EBIT), adjusted for one-off items, rose 12.1% to 2.05 billion euros (USD2.76 billion).

Sales and net income also narrowly missed consensus estimates, also hurt by an outage due to an accident at a Dutch plastics raw materials plant, run jointly with Shell.

The shares were seen 0.6% lower in pre-market trade, while Germany's blue-chip index was indicated flat from Wednesday's close.

"The devaluation of almost all major currencies against the euro negatively impacted earnings by roughly 200 million euros compared to the previous second quarter," said Chief Executive Kurt Bock in a statement.

The euro was up more than 5% against the U.S. dollar on average over the quarter.

Earnings at its core chemicals and plastics businesses as well as at its oil and gas unit rose faster than analysts had expected, helped by higher sales of petrochemicals in North America and increased offshore oil production in Libya.

The German group said that despite unfavourable currency developments, it continued to target a slight increase in adjusted EBIT in 2014 but warned that the economic environment had become more challenging.

BASF reiterated that it aimed to increase sales volumes excluding the effects of acquisitions and asset sales but that revenues would decline slightly due to the divestment of its gas trading and storage business.

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF had sales of about EUR74 billion in 2013 and over 112,000 employees as of the end of the year.
MRC

MOSCOW (MRC) -- Poland's largest oil group PKN Orlen said on Wednesday it might temporarily shut down its Lithuanian unit after impairments for the loss-making arm took the firm's second quarter loss to a record 5.2 billion zlotys (USD1.7 billion), said Reuters.

The Polish state-controlled group's results were weighed down by in-group impairment charges. The writedown for Orlen Lietuva stood at 4.2 billion zlotys, while for PKN's Czech unit Unipetrol it was 711 million zlotys.

PKN said the situation in Orlen Lietuva worsened in the second half of 2013 because margins were at a 10-year low. The group wants to lower the unit's expenditure to below USD20 million a year and improve efficiency.

"The fourth and first quarters of the year are usually the worst for the refining sector - lowest margins and weak sales," PKN's deputy chief Slawomir Jedrzejczyk said in a statement.

"That's why we are bracing for the worst scenarios, which may happen at the turn of 2014 and 2015. The first step may be to temporarily shut down the Lithuanian refinery."

PKN struggles with a sector-wide problem of low margins, with the Lithuanian unit additionally hit by high transportation costs.

Analysts on average expected PKN to swing to a net profit of 353 million zlotys in the second quarter from a loss of 207 million zlotys a year earlier, helped by a revaluation of oil reserves. But even though the group beat market forecasts with sales of 28.65 billion zlotys in the second quarter, net profit before the writedown stood at 134 million.

PKN now sees its investments at an annual average of 4.1 billion zlotys until 2017, as it wants to focus on the more profitable upstream business. It is targeting oil output at 6 million of barrels of oil equivalent (boe) a year by 2017.

Polski Koncern Naftowy ORLEN S.A. (PKN Orlen) is a Polish oil and gas company. It has a lot of petrol stations in Poland, Germany, Czech Republic, Lithuania and Slovakia. It is the biggest company in Poland and one of the biggest oil and gas companies in Europe. Polish group PKN Orlen PKNA is a majority owner - 63% of czech polyolefins manufacturer Unipetrol.
MRC

MOSCOW (MRC) - Russia's imports of polyamide (PA) and engineering plastics based on polyamide (PA-plastics) in the Russian market decreased to 6,200 tonnes in the first six months of the year, down 20% year on year, as per MRC DataScope report.

The main share in imports occurred for PA copolymers, with almost 60% from the total PA imports in the country. Russia's imports of PA copolymers were 3,700 tonnes in the first half of 2014, down 5% year on year. PA copolymers meant mainly glass-PA 6 and PA 66, which are the most popular material in the Russian market. The most popular brands were PA 6 and PA 66 with 30% glass fiber content. Also widely used retardant, temperature stabilizers, fillers and other high fillers. Main applications for PA copolymers are injection moulding of electrical engineering, automotive components. They are also used in the production of a barrier layer of the packaging film.

Imports of primary unfilled PA 6 in Russia usually takes about 20-22% from the total deliveries of PA and PA-plastics. Thus, Russia's imports of PA 6 were 1,300 tonnes in January-June, down 42% year on year. Pure PA 6 is most commonly used for the production of multilayer films and sausage casings.

PA-emulsions, the third largest segment in PA imports, are mainly used in the paint industry, or as the basis for adhesives, additives, mastics.
The imports of PA-emulsions took 12% from the total Russia's imports. Russia's imports of PA-emulsions were 756 tonnes in the first six months of the year, down 2% year on year.

Pure PA 66 took the smallest share from the total Russian PA market, with only 6% (352 tonnes) from the total PA imports in the first six months of 2014, down 9% year on year. PA 66 can be used for injection moulding of automotive components, electrical engineering and other parts for machinery.

Market PA and PA-plastics in Russia is very small because of the specifics of the product and high prices for it. There are a few traders work in this market because of high barriers of the market entry. Converters mostly prefer to work directly with the producers and buy imports directly themselves. The only Russian producer, Kuibyshev Azot produces unfilled PA 6 technology for processing yarn / fiber, as well as PA 6, which serves as a basis for further PA copolymers production.


MRC

MOSCOW (MRC) - Production of general purpose polystyrene (GPPS) and high impact polystyrene (HIPS) in Russia increased to 191,000 tonnes in the first half of 2014, up 25% year on year, as per MRC ScanPlast.

Russian PS production increased because of the expansion at Nizhnekamskneftekhim. The increase in the Russian PS production helped to displace imported volumes.

Russia's PS imports decreased to 25,600 tonnes in the first six months of the year, down 35% year on year. Russia's production of GPPS and HIPS reached 33,200 tonnes in the first six months of the year.

PS output is expected to decrease in July. Gazprom neftekhim Salavat has been shut for a turnaround since early July. Only Nizhnekamskneftekhim produces PS in July. Russia's GPPS and HIPS output will decrease by 3,000 tonnes to about 30,000 tonnes in July.

GPPS production at Penoplex was 4,500 tonnes in June. Polystyrene, produced by Penoplex was used at the own production of XPS-plates.

As previously reported, the production growth of PS in Russia contributes to the exports increase. GPPS and HIPS exports from Russia were 45,100 tonnes in the first half of 2014, compared with 20,000 tonnes year on year.
MRC