Northfield, Illinois - Stepan Co. has posted a growth in net income of 10 percent, reaching $79.4 million in 2012, its fifth consecutive year of record earnings, the speciality chemicals supplier said.
Sales volumes grew by 2 percent in the year, but revenues declined by 2 percent to $1.8 billion, which Stepan attributed to lower selling prices due to lower raw material costs and foreign currency effects. Gross profit increased 14 percent to $291.6 million in 2012 and 17 percent to $70.1 million in the fourth quarter.
In the polymers business, which includes aromatic polyester polyols, sales rose by 1 percent to $424 million in 2012, and by 9 percent in the fourth quarter to $103 million. Volumes rose 10 percent in Q4 and by 3 percent for the full year. This growth was primarily from polyols used in rigid foam insulation, Stepan said, adding that the full year volume growth included gains from new applications in metal panels and adhesives.
Polymer gross profit grew by 31 percent to $16.6 million in Q4, partly due to polyol profit growth. Full-year polymer gross profit rose 17 percent to $71.9 million, benefiting from a favourable sales mix of higher value-added polyol polyurethane systems, Stepan said. Polyol volume rose 5 percent in the year. A large PU systems order for an aircraft carrier and business interruption insurance recovery related to a 2011 fire in Stepan's German polyol plant positively impacted the year.
Stepan said that in 2013 it "will continue to pursue geographic expansion and higher value opportunities within all of its business segments." The company added that its polymers business should experience continued growth from polyols used in energy-saving rigid foam insulation. However, it expects to face higher costs to operate in China in 2013 and 2014 as the government is requiring that Stepan relocate its plant to new industrial zone. "We anticipate the higher cost of operating in China will limit polymer earning growth in 2013," the company concluded.