NOTE: Based on chemical sales figures for Top 100 producers in 1995. Chemical companies are those producers with 50% or more of their sales derived from chemicals. a U.S. companies.
A change has occurred at the top of C&EN's ranking of the Top 100 chemical producers. Dow Chemical has supplanted DuPont in its long-held position as the largest chemical producer in the U.S., in terms of chemical sales. DuPont has held the No. 1 position since C&EN began ranking the top chemical producers in 1969.
And it's the trends driving the chemical industry - becoming the most cost-effective producer and market leader through internal growth, mergers and acquisitions, the shedding of noncore businesses, and other restructurings - that has led to Dow's ascent.
"Our 1995 results reflect our company's momentum in creating a new level of performance based on our strategy for long-term success," says William S. Stavropoulos, Dow's president and chief executive officer. "Our strategy leverages Dow's global capabilities and core strengths in chemistry-related businesses to create value growth and continuously improve productivity," he adds.
Indeed, a portion of Dow's 21.8% growth in sales from 1994 can be attributed to the full-year accounting of production from its 1.2 billion-lb-per-year Fort Saskatchewan, Alberta, ethylene facility, which opened in September 1994.
Dow's chemical sales as outlined in its annual report were $19.2 billion in 1995. DuPont's chemical sales were $18.4 billion in 1995, compared with $16.8 billion in 1994. Third-ranked Exxon's chemical sales were $11.7 billion, compared with $9.54 billion in 1994.
In 1995, chemical sales for the 100 companies totaled $234.3 billion, compared with $200.8 billion posted by the Top 100 companies in 1994. Only nine companies recorded sales declines in 1995, the same number as in 1994.
Amassing the Top 100 chemical producers remains a daunting challenge as companies continue the practice of not breaking out their financial information by market segment. The absent statistics include operating earnings and identifiable assets as presented in their consolidated statements in their annual reports or statements. Foreign-held firms remain the most likely not to break out their financial data by segment - these firms also generally don't break out their data geographically.
NOTE: Based on chemical sales figures for Top 100 producers in 1995. Chemical companies are those producers with 50% or more of their sales derived from chemicals. a U.S. companies.
The chemical sales of the 100 companies that appear in the Top 100 are derived as if all the companies were based in the U.S. Thus, U.S.-based companies' worldwide chemical sales are used to compile the ranking. In the case of foreign-held companies, only those chemical sales that are reported from U.S. operations are used to compile the ranking. Worldwide sales rankings for the Top 50 global chemical producers will be published in a future issue of C&EN.
In the Top 100, 51 U.S.-based chemical companies - defined by C&EN as those with 50% or more of their sales derived from chemicals - provided 46% of the total sales in 1995, compared with 42% in 1994. The 19 U.S.-based diversified and other companies accounted for 19% of total chemical sales in 1995, matching their 1994 share. The 21 foreign-held firms in the Top 100 had a 20% share of total sales in 1995. That matched the 1994 share, but in 1994, only 17 foreign-held companies were in the Top 100. The nine U.S.-based petroleum and gas producers that also make chemicals held a 15% share of total chemical sales in 1995, a drop from the 19% share they held in 1994. Several petroleum producers sold portions of their chemical enterprises in 1995.
That companies do not always break out their various segments may have a direct bearing in the top position on the list. Because DuPont does not break out agricultural chemical sales from its diversified business segment, a portion of chemical sales is excluded from its total.
Foreign-held Bayer Corp. (Germany), BP America (U.K.), Air Liquide America (France), and BOC (U.K.) - all significant producers of chemicals in the U.S. - continue not to break out their chemical sales from total sales in their year-end statements and so are not listed. Other significant U.S.-owned chemical makers that do not break out their chemical sales include Procter & Gamble and 3M. Private companies, including Freedom Chemical and PQ Corp., do not have to publicly report financial statistics, but, nonetheless, would probably qualify for the Top 100 if they chose to release them.
Another quirk in the Top 100 is the overstatement or understatement of chemical sales by companies. For instance, Akzo Nobel Inc. - the U.S.-based operations of the Netherlands' Akzo Nobel - reports salt sales within its chemical results; Morton International, however, deducts salt sales from its chemical sales. AlliedSignal and General Electric place chemical sales in their "engineered materials" and "materials" segments, respectively. GenCorp's chemical sales are reported in the "polymer products" segment, which also includes sales of tennis balls, racquetballs, and wall coverings.
But others, most notably PPG Industries and Witco, have probably understated their chemical sales because their nonchemical business units sell chemicals.
The newcomers to this year's list include foreign-held Zeneca Inc. (U.K.), Courtaulds (U.K.), Laporte (U.K.), and Kemira (Finland). U.S.-owned newcomers include Asarco, Borden Inc., and General Chemical, which is in the midst of filing its initial public offering. Harris Chemical, Quaker Chemical, and Sequa have dropped off the list because their sales fall below Kemira's $286 million.
In 1995, there were other, more dramatic upward climbers than Dow in the Top 100. Although none of the mergers and acquisitions that took place between chemical companies put any of them close to knocking Dow off the crest, merger and acquisition activity resulted in substantial growth for some companies, including Witco.
Although Witco's 1995 sales grew 15.5% from 1994 to $1.54 billion, without the October 1995 acquisition of OSi Specialties, its sales would have been $1.44 billion. OSi accounted for $101.3 million of Witco's chemical sales in 1995. However, OSi is still ranked in this year's Top 100, with sales of $337 million - to account for the first three quarters of 1995 - but it is its last appearance because of the merger.
Terra Industries had the most dramatic sales growth in 1995, recording a 126% gain on sales of $830 million. It acquired AMCI for $506 million in October 1994. Mobil's sales rose 46.7% to $6.16 billion - primarily because of new capacity for aromatics in Singapore and additional capacity for polypropylene film in Europe. Other producers with impressive sales growth include Cambrex Corp. (47.8%), Sterling Chemicals (47.0%), and Vulcan Materials (40.4%).
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Mergers and acquisitions also eliminated some companies from the list. CBI Industries has become part of Praxair as a result of their merger in January. Praxair reported sales of $3.15 billion for 1995, but also reported pro forma sales of $4.11 billion as if the CBI merger had taken place on Jan. 1, 1995. The $960 million difference between Praxair's actual sales and the reported pro forma sales - which are reported as unaudited - are most likely all chemical sales. Praxair has said it intends to keep only CBI's Liquid Carbonic industrial gases business. And Merck exits the Top 100 because of its sale of specialty chemical maker Kelco to Monsanto.
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Dow also topped DuPont in chemical operating profits in 1995. It finished the year at $4.25 billion compared with DuPont's $3.46 billion. Exxon remained third with $2.73 billion. General Electric dropped to fifth from fourth with 1995 chemical operating profits of $1.47 billion.
But it was Mobil, fourth in operating profits, that posted the greatest growth in profits from its chemical enterprise. In 1995, operating profits were $1.55 billion compared with $82 million in 1994. Others with impressive operating profit growth in 1995 include Sterling Chemicals (408%), Terra Industries (275%), Shell Oil (216%), and Occidental Petroleum (201%). Another 15 companies had triple-digit chemical operating profit growth in 1995.
Nine companies had operating profit declines in 1995 but still remained in the black, including Witco ( - 43.7%), Petrolite ( - 39.7%), Crompton & Knowles ( - 29.9%), and Courtaulds ( - 21.8%).
Terra Nitrogen, the limited partnership controlled by Terra Industries, again finished at the top in operating profit margin, at 45.5%, up from last year's 29.2%. Terra Industries moved up to second (41.1%) from third in 1994, and Georgia Gulf moved to third (30.3%) from fourth. Hanson moved to fourth (28.5%) from 44th, and First Mississippi was fifth (28.1%), moving from 12th in 1994.
Dow also replaced DuPont as the largest holder of identifiable chemical assets - Dow reported $16.9 billion - in 1995. Exxon and General Electric remained third and fourth, respectively, in chemical assets, and Monsanto moved to fifth from sixth, replacing Occidental Petroleum, which fell to eighth.
Georgia Gulf remained first in return on chemical assets (ROA) at 64.6% in 1995, topping its 45.3% ROA in 1994. First Mississippi moved to second in ROA (63.3%) from sixth in 1994. Fina Inc. - the U.S.-based operations of Belgium's Petrofina - remained at third (55.7%); Terra Nitrogen was fourth (50.2%) - but was not ranked in 1994 - and Farmland Industries was fifth (48.4%), falling from fourth in 1994.
Some of the mergers and acquisitions involving U.S. chemical producers helped the firms gain market share in the related pharmaceutical industry. Hoechst's purchase of Marion Merrell Dow from Dow Chemical and Rhone-Poulenc's purchase of Fisons furthered their endeavors to be leaders in certain pharmaceutical markets. And the pending merger of Ciba-Geigy and Sandoz likely will result in the creation of one or more new, strictly chemical entities.
Early merger and acquisition activity in 1996 will lead to some movement in next year's Top 100. In March, IMC Global and Vigoro Corp. completed their merger. IMC Global reported sales of $1.92 billion for its 1995 fiscal year, which ended on June 30. On a 1995 calendar year, IMC Global's sales were $2.09 billion and Vigoro's were $934.4 million. However, Vigoro's 1995 sales also included revenues from its 200 retail-store operations.
And in the not-so-distant future, the next merger, acquisition, or spin-off involving chemical companies could displace Dow, DuPont, or Exxon from their perches.
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