By Liz White, UT editor
Northfield, Illinois-Aromaticpolyester polyol producer Stepan Co. announced on 21 Dec 2006 that it expects afourth quarter net loss of $5 to $6 million commenting that "decliningprofit margins" in polyurethane polyol and phthalic anhydride contributedto lower earnings in the polymer sector.
Stepan pointed out that the margindecline is "caused by working off higher priced feedstock inventories asraw material costs declined."
The Q4 loss for Northfield-basedStepan compares to a loss of $0.4 million in the previous quarter. Full yearnet income will be in the range of $6.0 to $7.0 million, Stepan added.
"After a strong thirdquarter, we were expecting operating results to exceed the prior year,"commented Quinn Stepan Jr, president and chief executive officer, in Stepan'sannouncement. "Lower margins combined with unplanned higher plantoperating costs contributed to the poor results," he added.
Stepan's surfactant earnings willbe lower largely as a result of employee severance costs of about $1.8 millionafter tax following a European staff reorganisation.
Quinn Stepan pointed out thatthese staff reductions should result in annual after-tax savings of $1.0million.
"We have confidence that thecost reductions implemented in 2006 coupled with business opportunities forgrowth, particularly in fabric softener and polyurethane polyols will lead toan improved full year result in 2007," the Stepan president added.