AkzoNobel profits grow on cost-saving programs, beats estimates

MOSCOW (MRC) -- AkzoNobel says its net profit for the third quarter increased 36% year on year (YOY), to EUR220.0 million (USD260.8 million) driven by strong margin-management and cost-cutting programs, which delivered EUR49 million in savings, of which EUR27 million were structural savings related to the company’s transformation initiative, said Chemweek.

Revenue was down 5% YOY, to EUR2.28 billion despite 3% growth in volumes driven mainly by strong demand for decorative paints, the company says. EBIT was 32% higher than in the same period of 2019, to EUR326 million, beating analysts’ consensus estimate by 4%.

The company’s third-quarter performance reflects a 3.9% higher YOY return on sales (ROS), to 17.7%, and lower, by EUR38 million, costs of sales, which include raw materials and other variable costs. “These results were made possible by the continued commitment of all AkzoNobel colleagues around the world, adapting to the challenges presented by COVID-19,” says Thierry Vanlancker, CEO of AkzoNobel.

Decorative paints revenue was up 4% YOY, to EUR1 billion on 14% higher volumes, mainly due to strong end-market demand in Europe and South America, the company says. However, positive price developments were more than offset by unfavorable mix impacts due to geographical shifts, resulting in price/mix 4% lower, it says. Operating income increased 55% YOY, to EUR202 million and was negatively impacted by EUR6 million of identified items related to transformation costs, AkzoNobel says.

Performance coatings revenue was 10% lower YOY, at EUR1.27 billion on 5% lower volumes, especially for oil and gas related projects, as well as for the automotive and aerospace industries. Operating income was 15% higher YOY, to EUR179 million, adversely impacted by €16 million of identified items, mainly related to transformation costs.

AkzoNobel says COVID-19 headwinds eased in the third quarter, but that demand trends still differ by region and segment. As a result, the company’s outlook for 2020, which was suspended earlier this year, remains suspended. AkzoNobel nevertheless expects raw material costs to have a favorable impact in the fourth quarter.

Margin-management and cost-saving programs are in place to address the current challenges caused by the uncertain macroeconomic environment, AkzoNobel says. The company has also announced a €300-million share buyback, to be completed in the first half of 2021.

As MRC informed earlier, BASF would expand the capacity of ethylene oxide and ethylene oxide derivatives at its Verbund site in Antwerp, Belgium. The total investment adds about 400 000 tpy to BASF’s production capacity for the corresponding products with an expected investment amount exceeding EUR500 million.

We remind that Russia's output of chemical products rose in August 2020 by 5% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first eight months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-July output. August production of benzene fell to 102,000 tonnes from 95,300 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 918,300 tonnes over the stated period, down by 0.9% year on year. At the same time, August production of primary polymers rose to 888,000 tonnes against 838,000 tonnes in July due to increased capacity utilisation at ZapSibNeftekhim, Stavrolen and Gazprom neftekhim Salavat. Overall output of polymers in primary form totalled 6,630,000 tonnes over the stated period, up by 15.2% year on year.

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. Established in 1992 and specializing in sustainable water-based and advanced eco-friendly products, Mapaero operates a production facility in France and has around 140 employees.
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MOSCOW (MRC) -- AOC, Kaprain and Spolchemie announce they have reached agreement on AOC acquiring the Unsaturated Polyester Resin (UPR) manufacturing operations located at the Spolchemie site in Usti nad Labem (Czech Republic), said the company.

This footprint extension will allow AOC to further improve service and logistics to its customers in Central/ Eastern Europe as well as in Germany, and will make new products (e.g. based on recycled PET) available for customers around Europe.

The UPR plant at the Spolchemie site in Usti nad Labem (located 70 km Southeast of Dresden, Germany) has already been making resins for AOC on a contract basis for many years. Besides state-of-the-art UPR production equipment, the plant has unique capabilities for manufacturing green resins based on recycled PET.

AOC, Kaprain and Spolchemie have signed on 15 October 2020 an agreement to transfer the operations to AOC (to become effective as soon as possible in the 4th quarter of 2020). This acquisition enables AOC to significantly extend its manufacturing footprint, and further adds to the company’s global presence.

"This acquisition will give AOC a major leverage for strengthening our market position in Central and Eastern Europe, as well as in Germany. It enables us to ensure continued competitiveness in the region”, explains Joe Salley, CEO of AOC. “The acquisition proves our commitment to this industry, helping us and our customers to build even stronger relationships through supply security and continued technical collaboration."

“The Usti operations have been working for AOC already since long time, and supported the company with great service and resins in sizeable volumes”, adds Romana Benesova, CEO of Kaprain Investment Group. “I am very happy that through this acquisition by AOC we have found a good home for this business, allowing Spolchemie to focus on our core business of chlorinated hydrocarbons and epoxy resins."

"AOC has been delivering quality resins for composites applications for over 50 years, and is recognized for its market leadership in quality and innovation”, comments Stefan Osterwind, AOC Managing Director EMEA. “As a result of this change, AOC can take a stronger ownership of the operations and apply its manufacturing expertise from around the globe. This will also help to strengthen the product portfolio we can offer to the region, including our broad range of specialty resins. At the same time, the products based on recycled PET will become available to more customers across the European continent."

As per ICIS-MRC Price Report, rhe activity in the Russian polyethylene terephthalate (PET) market was not strong last week, which is typical for this period of the year. Some converters reported a weaker demand in the market of finished PET products. Spot prices for Russian PET increased in mid-October.
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MOSCOW (MRC) -- France’s Kem One declared a force majeure (FM) on mass and suspension polyvinyl chloride (PVC-M and PVC-S) supplies from its plants in Saint-Fons and Balan sites, France, on October 13, reported NCT with reference to a letter to customers.

A disruption in the feedstock chain for monomer vinyl cloride (VCM) stemming from the interrupted navigation on Rhone River was cited as the reason behind the FM.

As the Saint-Fons and Balan sites cannot be supplied with VCM by barge due to the recent interruption, the company was forced to significantly reduce PVC production at these sites.

Kem One will not be able to supply mass and suspension PVC as scheduled earlier, while it is yet to be known when the force majeure would be lifted. The company is searching for alternative solutions to supply VCM to the abovementioned sites.

Saint-Fons site can produce around 210,000 tons/year of PVC, while the company’s Balan plant has a PVC production of 300,000 tons/year.

As MRC wrote before, in late July, 2020, ferric chloride leaked from Kem One’s (Lyon, France) PVC production site at Berre, France, into the Mediterranean Sea. Several reports quoted then a Kem One spokesperson, who confirmed that the leak came from a storage tank and that the liquid was discharged into the sea via a storm sewer. The company said the incident caused no injuries.

According to MRC's ScanPlast report, Russia's overall PVC production totalled 718,500 tonnes in January-September 2020, down by 0.3% year on year. At the same time, only two producers managed to increase their PVC output.

Kem One, a fully integrated vinyl production company, was established mid-2012 following the acquisition of Arkema's vinyl products division by the Klesch Group. The company employs 2,600 people at 22 manufacturing sites, primarily in Europe but also in Asia and North America. Europe’s second-largest producer of PVC with revenues in excess of one billion euros, Kem One continues to grow and build on its numerous strengths with a view to becoming market leader for integrated vinyl solutions.
MRC

MOSCOW (MRC) -- Pactiv Evergreen has announced a new goal that by 2030, 100% of its products will be made with recycled, recyclable or renewable materials, said the company.

"Consumers and brands are increasingly looking for sustainable packaging solutions. Pactiv Evergreen is committed to meeting those market demands,” said John McGrath, the company’s CEO. “We are nearly two-thirds of the way towards our goal based on 2019 net revenues, and in the next decade, we will work to achieve that 100% goal."

The report further outlines a comprehensive sustainability strategy, which includes a new vision, mission and pillars that ground the company’s current and future initiatives.

Based on 2019 net revenues, Pactiv has reached nearly two-thirds of the goal, “and in the next decade, we will work to achieve that 100% goal”, McGrath added. In the report, the company also noted it decreased its greenhouse gas emissions by 10% in the last five years, and that about half of its annual energy consumption comes from renewable sources, including biomass, hydropower, wind and solar.

As MRC informed earlier, chemical recycler Plastic Energy has teamed up with consumer products major Nestle on a study for a commercial large-scale plastics recycling facility in the UK. Nestle UK and Ireland has partnered with chemical recycling company Plastic Energy to develop a recycling plant in the UK. The two companies will explore the scope for the first-commercial large-scale facility of its kind in the country.

We remind that Russia's output of chemical products rose in August 2020 by 5% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first eight months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-July output. August production of benzene fell to 102,000 tonnes from 95,300 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 918,300 tonnes over the stated period, down by 0.9% year on year. At the same time, August production of primary polymers rose to 888,000 tonnes against 838,000 tonnes in July due to increased capacity utilisation at ZapSibNeftekhim, Stavrolen and Gazprom neftekhim Salavat. Overall output of polymers in primary form totalled 6,630,000 tonnes over the stated period, up by 15.2% year on year.

Pactiv Evergreen Inc. is the largest manufacturer and distributor of food and beverage packaging in North America with a diversified mix of customers, including restaurants, foodservice distributors, supermarkets, food and beverage producers, food packers and processors. Additionally, the company manufactures paper and paperboard from responsibly sourced fiber, providing supply chain confidence to customers. With over 15,000 employees, the Lake Forest, Illinois-based company helps make today’s convenience-oriented lifestyle possible with products that give people the freedom to eat and drink fresh food and beverages safely anytime and anywhere.
MRC

MOSCOW (MRC) -- Hyosung Vina Chemicals Co Ltd is on track to restart its new polypropylene (PP) unit in Vietnam following a three weeks shutdown due to an unspecified technical issue, reported CommoPlast with reference to market sources.

The 300,000 tons/year plant was taken offline on 29 September 2020.

As MRC informed before, following the start-up at the newly constructed PP plant in Vietnam on 12 February 2020, it was reported that Hyosung reached on-spec cargoes approximately in mid-February. The first prime grade parcels were homo-PP yarn grade F501N with a melt index of 3.7.

This is the No. 1 PP unit that has an annual capacity of 300,000 tons/year, operating using external sources of propylene. The company is constructing the Phase II project at the same location, which houses a propane dehydrogenation (PDH) plant and No. 2 PP unit that could produce another 300,000 tons/year.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Hyosung Corporation is a Korean industrial conglomerate, founded in 1957. It operates in various fields, including the chemical industry, industrial machinery, IT, trade, and construction.
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