Rohm and Haas 3Q Results: Sales Up 7 Percent Driven by Electronic Materials and Architectural and Functional Coatings
"This quarter's results again reflect the continued strength in our Electronic Materials franchise, as well as solid demand across most of our chemicals businesses," said Raj Gupta, chairman, president and chief executive officer. "Despite some evidence of slowing in the building and construction market in North America, demand across our key markets still remains strong, and our global reach is enabling us to grow faster in the emerging markets. This quarter's results maintain the momentum of solid earnings growth we have demonstrated over the past several years."
Gupta further noted that the company is effectively navigating the challenging environment of volatile prices for key raw materials. "We are experiencing extraordinarily high costs for key petrochemical raw materials, despite the recent drop in oil prices," Gupta explained.
Third-quarter sales in the Coatings segment of $700 million increased 5 percent over the third-quarter of 2005. The improvement was attributed to higher selling prices to recover rising raw materials, higher demand, particularly in emerging markets, along with the favorable impact of currencies.
Architectural and Functional Coatings sales, which account for the majority of sales in the Coatings segment, increased 6 percent over the comparable period, due to higher pricing necessary to recover rising raw material costs. In addition, the business saw strong demand in the emerging markets, particularly China, Turkey, India and Latin America, along with more modest growth in North America. New products, particularly the low-VOC product lines and other innovative and environmentally friendly products, continue to gain acceptance.
Powder Coatings sales increased 3 percent over the prior year period, driven primarily by higher selling prices and the favorable impact of stronger European currencies, which more than offset the impact of lower demand.
Third-quarter earnings for the Coatings segment were $64 million, including $2 million after-tax of restructuring charges, versus $74 million in earnings in the same period in 2005. The significant run-up in raw material costs during the quarter, along with spending to fund growth initiatives, more than offset the favorable impact of higher selling prices and currencies.
Gupta noted that the macro-economic outlook remains somewhat uncertain, given the volatile nature of petroleum-based feedstocks and energy costs, some slowing in the housing market in North America, and the potential impact of these factors on consumer spending late in the year.
"Despite these conditions, we have demonstrated our ability to use innovation and differentiation to grow our businesses, particularly Architectural and Functional Coatings and Electronic Materials. Combined with our geographic position, particularly in emerging markets, we expect full-year sales growth in the approximately 5 percent range, yielding record annual sales of $8.3 billion and earnings from continuing operations in the $3.40-$3.45 range."
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