By David Reed contributing editor
Northfield, Illinois-Stepan Co., US-based maker of surfactants and other speciality chemical products including aromatic polyester polyols (APPs) used in making rigid polyisocyanurate foams, reports that net income in its third quarter was just over $6 million, up 45 percent on the same period last year, on sales just 14 percent higher at $303 million.
For the nine months to 30 Sep., however, income was down 10 percent, at $12.2 million while sales were up 9 percent, at $884.4 million, the firm reported in a 20 Oct. announcement.
The firm's polymer business, which largely comprises the APPs activity, reported a gross profit in the third quarter of $1.3 million, up 13 percent on the same period in the prior year, due to a 27-percent increase in sales volume.
"Profit margins [in the polymer business] were adversely impacted by higher raw materials costs," the statement said.
The year-to-date result showed "a large decline in polyurethane systems gross profit, attributable to a non-recurring contract fulfilled in the second quarter last year," the Stepan statement explained. "The Chinese polyol venture experienced rising raw material costs that resulted in a small loss for the quarter," the statement added.
"The third quarter improvement was broad based," said F. Quinn Stepan, Jr, the firm's president and CEO. "Biodiesel contributed, but our broader surfactant customer and product portfolio showed greater earnings improvement. Polymer volume and earnings continued to improve," he added.
Net sales in the polymers segment reached $73.7 million in the third quarter, up 47 percent on the same period last year, giving a total sales figure for the nine months to 30 Sep. of $196.6 million, up 15 percent on the prior year, Stepan reported. Total net sales for the company in the nine months to 30 Sep. were $884.4 million, up 9 percent on the same period in 2005, the report also showed.
Stepan's gross profit for the nine-month period was $101.5 million, up 4 percent on the same period last year. Allowing for operating expenses, including the cost of marketing, administration, research and development and technical services, yielded an operating income of $24.4 million for the three quarters, down 4 percent on the same period last year.
Once other income and cost components were allowed for, including provision for income taxes, Stepan's net income came to $12.2 million for the nine months to 30 Sep., down 10 percent on the same period in 2005.
Looking ahead, Quinn Stepan, Jr said that "volume is expected to exceed last year's fourth quarter in both surfactants and polymers. Recovery of higher raw material costs in the marketplace continues to be largely successful," he added.
He also announced that "we will reorganise our European business in the fourth quarter as we continue to focus on profitability," but gave no further details of what this might involve.
Full details are available on the company's website at: http://www.stepan.com/"