Wacker Chemie 2014 net profit rises by 14% on higher sales

MOSCOW (MRC) -- German specialty chemicals maker Wacker Chemie said its core profit rose by 14 percent in the fourth quarter, helped by a recovery in prices and demand for polysilicon, a key material it supplies to the solar industry, said Reuters.

Wacker Chemie said its preliminary fourth-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) came in at 180 million euros (USD203 million), beating the 177 million average forecast in a Reuters poll.

"The main reason for the higher earnings was the year-on-year improvement in prices for solar silicon," the company said in a statement, adding the business division continued to run its production facilities at full capacity in the fourth quarter.

Sales in the period rose about 10 percent to 1.19 billion euros, also higher than the 1.15 billion analyst forecast. Shares in Wacker Chemie were indicated 0.2 percent higher, the only gainers among Germany's mid-sized stocks, according to pre-market data.

The company is the world's second-biggest maker of polysilicon after U.S.-based Hemlock Semiconductor, and the business unit accounted for more than half of the group's fourth-quarter core profit.

Prices for polysilicon have recovered strongly over 2014, boosted by strong demand for solar panels in China and ending a margin squeeze in which prices tumbled to less than USD20 per kg in 2013 from a 2008 peak of almost USD400.

Manufacturing a wide range of products, Wacker Chemie also supplies raw material for half of the world's chewing gum.

As MRC reported earlier, Wacker Chemie AG launched its new production plant for ethylene-vinyl-acetate copolymer (EVA) dispersions at its Ulsan site in South Korea. The additional 40,000 tonnes from the second reactor line increases the site's EVA-dispersion capacity to a total of 90,000 tonnes per year. The production capacity of the site, thus, almost doubled, making the plant complex one of the biggest of its kind in South Korea.

Wacker Chemie AG is a worldwide operating company in the chemical business, founded 1914. The company is controlled by the Wacker-family holding more than 50 percent of the shares. The corporation is operating more than 25 production sites in Europe, Asia, and the Americas. The product range includes silicone rubbers, polymer products like ethylene vinyl acetate redispersible polymer powder, chemical materials, polysilicon and wafers for semiconductor industry.
MRC

MOSCOW (MRC) -- Packaging companies Rock-Tenn Co and MeadWestvaco Corp agreed to form a combined USD16 billion company to take on market leader International Paper Co in the United States and abroad, said Reuters.

Shares of MeadWestvaco and Rock-Tenn rose to record highs. Demand for the corrugated boxes made by both companies has risen sharply as internet shopping has taken off. Worldwide e-commerce sales are expected to have risen 20 percent to USD1.5 trillion last year, according to industry data firm eMarketer.

The merger, announced by both companies on Monday, will create the second-largest U.S. packaging company behind International Paper, which has a market capitalization of nearly USD23 billion. MeadWestvaco shareholders will have a 50.1 percent stake in the new company, which will be named before the deal closes and based in Richmond, Virginia, where MeadWestvaco is headquartered.

Rock-Tenn shareholders can receive either one share of the new company for each share held or a cash amount equal to the average price of Rock-Tenn shares over a five-day period ending three trading days before the deal closes.

Though both firms primarily are paper-based packagers, a portion of the new company will keep operating in plastics packaging. MWV bought Calmar, an injection moulder, for USD710m in 2006.

Rock-Tenn and MeadWestvaco each reported better-than-expected quarterly profit on Monday. Norcross, Georgia-based Rock-Tenn's shipments of corrugated boxes rose about 11 percent in the quarter ended Dec. 31. Rock-Tenn Chief Executive Steven Voorhees will lead the new company. Luke, his counterpart at MeadWestvaco, will become non-executive chairman.

MeadWestvaco, which decided this month to spin off its chemicals business after pressure from activist investor Starboard Value LP, said the separation would be completed after the merger. The companies said the structure of the deal would help retain the "favorable tax attributes" related to this spinoff.

MRC

MOSCOW (MRC) -- Negotiations over February contract prices of Russian polyvinyl chloride (PVC) started this week. Producers announced a price increase of Rb4,000/tonne from January, according to ICIS-MRC Price report.

Negotiations over prices of Russian suspension PVC (SPVC) for February shipments to the domestic market began on Monday. Local producers unanimously announced an increase of 7% from January in February contract prices. Converters realized that a price hike could not be avoided, but at the same time they complained that such a price rise was hard enough to accept, given the limited financing.

The possibility of purchasing imported material by converters disappeared in November because of the major rouble devaluation. Even now, when February export prices in the United States and China dropped by more than USD100/tonne to USD740-750/tonne CFR St Petersburg and USD710/tonne DAP Dostyk, respectively, and given the current exchange rate, prices of imported PVC approached Rb70,000/tonne, including VAT and delivery.

Russian converters realize that at the moment there are no alternatives to the local PVC and will have to accept price increases. At the same time, most companies are experiencing serious problems with working capital. Interest rates have risen significantly since December and reached 25% per annum, while to get the credit is quite difficult.

Window profiles producers account for the most deplorable situation. Due to the high quality requirements, many producers of this products use in their production exclusively imported materials (additives, titanium dioxide, etc.). And the rouble devaluation actually doubled the cost of these materials.

Some large converters said they intend to achieve deferred payment for February contract because of issues with the working capital. Otherwise, companies will simply refrain from buying this month.
MRC

MOSCOW (MRC) -- CB&I has been awarded a contract renewal valued at approximately USD65 million by a leading crude oil refiner, reported Hydrocarbonprocessing with reference to the company's announcement.

The contract is for long-term maintenance, small capital construction projects and other industrial services at its facility near the Gulf Coast of Texas.

"CB&I is focused on building sustainable value for our customers through improved reliability and performance," said Patrick K. Mullen, president of CB&I's engineering, construction and maintenance operating group.

"This contract renewal underscores the confidence our customers place in CB&I's ability to provide real-time operational improvements in an environment where safety is paramount," he added.

As MRC informed previously, in late 2013, CB&I was awarded a contract valued at approximately USD1 bln by Ingleside Ethylene LLC, a joint venture between Occidental Chemical Corporation (OxyChem), a subsidiary of Occidental Petroleum Corporation, and Mexichem, S.A.B. de C.V. (Mexichem) for the engineering, procurement and construction of an ethane cracker and associated utilities and offsites to be located at OxyChem's complex in Ingleside, Texas,
MRC

MOSCOW (MRC) -- Toray Industries, Inc. has announced that it has formulated a plan to expand the polyester staple fiber business at Toray Chemical Korea Inc., the acquisition of which Toray completed in February 2014, to pursuit synergy effects within Toray Group, said the producer on its site.

According to the plan, Toray will boost production capacity of low melt polyester staple fiber (LM polyester staple fiber) at TCK’s Gumi I Plant in Gumi, Gyeongsangbuk-do by about 1.7 times to 170,000 tons.

The additional LM polyester staple fiber production facility is expected to start production in July 2016.

In addition, Toray will also increase production capacity of bi-component staple fibers of both polypropylene-polyethylene and polyester-polyethylene (bi-component fibers) used to produce nonwoven fabric for personal hygiene materials materials, whose demand has been growing rapidly.

LM polyester staple fiber is used as binder (a bonding agent) to combine staple fibers using heat in the manufacturing process of nonwoven fabric, and it is mainly used in nonwoven fabric used for acoustic insulation material for automotive and cushions for mattress and other furniture.

In July 2004, prior to Toray’s acquisition, TCK started producing LM polyester staple fiber and currently has the third biggest share in the global market. With the expansion of production facility, Toray Group aims to establish its position in the growing LM polyester staple fiber market and increase sales of and income from nonwoven fabric staple fiber.

Moreover, the market of nonwoven fabric for personal hygiene materials, for which bi-component fibers are used, is expected to grow at an annual rate of 6%, due to the demand increase reflecting improving living standard of the people in emerging countries primarily in Asia and the advent of the aging society in developed countries.

In preparation for the expansion of polypropylene spunbond market, Toray Group has been enhancing its production capacity in major countries in Asia. The composite fiber production capacity increase at TCK would enhance the product lineup of the materials, from filament to staple fibers, used in nonwoven fabric for personal hygiene materials products.

As MRC wrote before, in late December 2014, Toray Industries, Inc. announced that the company and its subsidiary Toray Advanced Materials Korea, Inc. would expand the production facility for high-performance polypropylene (PP) spunbond at P.T. Toray Polytech Jakarta (TPJ) by 18,000 tons per year. After the enhancement, the production capacity of TPJ will be about 37,000 tons per year, boosting the Toray Group-wide PP spunbond production capacity to about 153,000 tons per year. The added production facility at TPJ is expected to start operating in September 2016.

Toray Industries is a multinational corporation headquartered in Japan that specializes in industrial products centered around technologies in organic synthetic chemistry, polymer chemistry, and biochemistry. Its founding business areas were fibers and textiles, as well as plastics and chemicals. Toray Group Malaysia companies are involved in four main businesses -- polyester fibres, textiles, plastic resins and polyester films.
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