Saturday, July 26, 2014

Nutritional Products Sales Increases

In 2013, DSM, FMC, BASF, and DuPont had significant nutritional products sales.  Each company has a separate segment where nutritional products represent an important contribution to the segment’s sales.  In 2013, DSM's segment, called Nutrition, accounted for 46.4% of total company sales.  For the other companies, their corresponding Nutrition & Health segments represented these percentages of total sales: FMC – 19.7%; BASF – 2.8%; and DuPont – 9.7%.  These segments do provide other products in addition to nutritional products, including personal care and flavor/fragrance products, but, nevertheless, nutritional products certainly are part of the segments’ strategic sales goals.

Also, these Nutrition & Health segments are showing reasonably strong sales increases.  For example, the compound average growth rate percentage increases from 2011 to 2013 for the companies’ segments are: DSM – 7.3%; FMC – 5.2%; BASF – 3.9%, and DuPont – 12.2%

Nutritional products being sold by these companies include the following:

DSM - vitamins; nutritional lipids (polyunsaturated fatty acids); enzymes; cultures; and carotenoids.

FMC - omega-3 oils and fatty acids.

BASF - vitamins; carotenoids; sterols; enzymes; and omega-3 fatty acids.

DuPont – probiotics and cultures.

These four, large chemical companies appear to have strong interest in developing their nutritional products businesses.  Reasons might include:

1.  New developments in human and animal nutritional need to be based on good, strong science.   Good, strong science is a major asset of these companies and putting this asset to work, from which useful, in-demand products can be developed, would be attractive to the companies.
2.  Chemical companies excel in the supply chain/logistical requirements of processing raw materials through multiple steps into finished products, an excellence that match well the needs of nutritional products.
3.  Because of 1 and 2, these companies can differentiate their products from others and through these differentiations, higher margins can be expected.

4.  With larger global, more economically robust, and older populations, interest and use of nutritional products likely will grow.

Thursday, July 24, 2014

Industrial Enzymes Profits and Demand Are Strong

An extensive Internet search and analysis have identified four public companies with significant industrial enzymes sales.  These companies are: Novozymes; DuPont; DSM; and Chr Hansen.   In Novozymes' 2013 annual report, the company estimates that the total global industrial enzymes sales for all companies to be more than $3.9 billion, a 5% increase over the 2012 global sales.   The report states that Novozymes is the global sales leader in industrial enzymes products, with 48% of the market, followed by DuPont with 20%, DSM with 6%, and others with 24%.

The four companies indicate in their annual reports (annual reports can be read at the companies’ websites) high growth expectations for future sales of enzymes products.  And, each company indicates that industrial enzymes research and development is expected to lead to more enzymes uses in several industry sectors.

The following data and information relate to the above four companies’ industrial enzymes businesses.  The data and information are from the companies' 2013 annual reports.

Novozymes   Unlike the other four companies, Novozymes sales are predominantly industrial enzymes; therefore, computing a reasonably accurate gross profit margin percentage (GPM%) for enzymes sales is possible (most of the reported total company sales and cost of sales are enzymes revenues and costs).   Novozymes’ GPM% in 2013 was 57%.  Novozymes had about $2 billion in total sales in 2013.

DuPont   DuPont became the second largest provider of enzymes products with its 2011 acquisition of the Danish company Danisco, which at that time was the second largest enzymes provider, behind Novozymes.  DuPont’s industrial enzymes business is in its industrial biosciences segment and from the company’s 2013 annual report, enzymes represented 79% of the segments sales, or $950,000,000.  

DSM   DSM in 2012 acquired enzymes businesses of the US companies Cargill and Verenium to increase its own enzymes business.  DSM enzymes business focuses on the food and beverage industry and DSM has its enzymes business in its Food Specialties Division.  In 2013, the Food Specialties Division had about $558,000,000 in sales, most of which were enzymes products.  This sales amount was about 13.5% higher than 2012 sales.

Chr Hansen   61% of Chr Hansen’s 2013 sales were enzymes products. This 61% represented about $600,000,000 in sales.  The overall GPM% for all Chr Hansen sales was 85%.   With 61% of the sales enzymes, it is likely that enzymes sales had a high GPM% (as enzymes sales do at Novozymes, which was 57% in 2013).   Chr Hansen enzymes are exclusively for the food industry.

The total approximate enzymes sales for the four companies provided above comes to $4.1 billion, which is reasonably close to what Novozymes estimated in its annual report for the global enzymes sales in 2013 (which was $3.9 billion).  These four companies probably account for most of the industrial enzyme products sold globally in 2013.

The data and information presented above indicates that profits in the industrial enzymes business are strong and that future enzymes demand is expected to be high.

Thursday, July 17, 2014

Some Production and Export Data on Turkey’s Chemical Industry

A report, titled “The Chemicals Industry in Turkey”, from the Investment Support and Promotion Agency of Turkey (ISPA) and Deloitte, provides some useful production and export data on Turkey’s chemical industry.  Click here to read the report (PDF file).

According to the report, in 2012, the Turkey chemical industry produced $44 billion worth of chemicals and exported $20 billion, or approximately 45% of the amount produced.  This 45% export amount is surprisingly high, and shows that Turkey’s long-term goal of increasing its chemical exports is being successful.  Over the last several years, both Turkey’s chemical production and export amounts have increased, on average, at around a compound annual growth rate of 9%.

The report also provides production, export, and import data amounts for six chemical sub-groups: paints; fertilizers; personal care; plastics; rubber; and inorganics.  In analyzing this data, some interesting conclusions are reached.  First, for all six sub-groups, imports exceed exports, but much more so for the paints, fertilizers, and plastics sub-groups.  The personal care, rubber, and inorganics sub-groups have exports values much closer to imports.  This suggests to me that products in these three sub-groups (personal care, rubber, and inorganics) do better as exports than products in the other three sub-groups (paints, fertilizers, and plastics).

Another interesting conclusion that the data suggests is that Turkey imports a substantial proportion of its chemicals from countries with well-developed chemical industries, e.g. Germany, Italy, and Russia, whereas a more substantial portion of its exports go to neighboring countries with less-developed chemical industries, such as Iraq, Egypt, and Iran.  An exception to this conclusion is the rubber and inorganics exports, where most of the exports go to more-developed countries.   That Turkey has two huge international companies, Goodyear and Pirelli, producing tires and that Turkey is very rich in mineral resources, such as boron salts, probably account for the demand for Turkey's rubber and inorganics products by more developed countries.

Another interesting conclusion from the analysis of data in the ISPA/Deloitte report is that in 2011 the price of a gallon of Turkey-produced paint (aqueous; non-aqueous; and other paints) was about $4.75 (assuming one gallon of paint weighs about 9 pounds).  By comparison, from the United States Census Bureau, the 2011 price in the United States of a gallon of architecture coating paint was about $15.25.  (Click here to go to the US Census Bureau data.)

Please email me if you are interested in more about the above or what might be available on chemical production, import, and export data for other countries.

Friday, July 11, 2014

European Union’s Natural Gas and Liquefied Natural Gas Use Data

A 2013 report “Statistical Report 2013” from Eurogas provides excellent data on the European Union (EU)'s recent use of natural gas and liquefied natural gas (LNG).  Click here to read this report (PDF file).

The report shows that the 28 EU countries obtained their natural gas in 2012 from the following sources: member countries – 33%; Russia – 23%; Norway – 22%; Algeria – 9%; and other countries – 13%.  Approximately 5,061 Terawatt hours (TWh) of natural gas was consumed by the EU in 2012.  The EU used approximately 2% less natural gas in 2012 compared to 2011.

Of the natural gas consumed in 2012, approximately 631 TWh of it was imported in the form of LNG.  Therefore, approximately 13% of the natural gas consumption came into the country as LNG (631 TWh imported/5,061 TWh used).  Qatar provided the highest percentage of this 631 TWh LNG imported (45%), followed by: Nigeria – 17%; Algeria – 17%; and others such as Norway, Trinidad-Tobago, Peru, and Egypt.  LNG imports in 2012 were approximately 28% less than in 2011.

In 2012, the EU had approximately 19 LNG degasification terminals, capable of transforming LNG into gas.  The total degasification capacity for these terminals is estimated to be about 2,063 TWh of gas.  However, only about 31% of this capacity was used in 2012 (631 TWh LNG consumed/2,063 TWh capacity).

Because of the upsurge in the United States natural gas supply, due to advances in shale gas extraction, exporting the excess as LNG to Europe (and Asia) is being planned by many companies.  The data given above and in the Eurogas report could be useful in better strategizing LNG exports to Europe.

Data in the report came from natural gas associations in the EU countries and elsewhere, member companies of Eurogas, and other sources.  Eurogas is a non-profit association representing the interests of the European gas industry.

Wednesday, July 2, 2014

Chemical and Material Shortage Alert – June 2014

The purpose of this blog is to identify chemical and material shortages reported on the Internet.  The sources of the information reported here are primarily news releases issued on the Internet.  The issue period of the news releases is June 2014.

Section I below lists those chemicals and materials that were on the previous Chemical and Material Shortage Alert list and continue to have news releases indicating they are in short supply. Click here to read the May 2014 Chemical and Material Shortage Alert list.

Section II lists the new chemicals and materials (not on the May alert).  Also provided is some explanation for the shortage and geographical information.  This blog attempts to list only actual shortage situations – those shortages that are being experienced during the period covered by the news releases.   Chemicals and materials identified in news releases as only being in danger of being in short supply status are not listed.

Section I.   Chemicals and materials that continue from May to be reported as in short supply are: iron ore (India).

Section II.   Shortages Reported in June not found on the Previous Month’s List

Lumber:  United States; supply not keeping up with demand.
Butadiene:  World-wide; production not keeping up with demand (increased natural gas, reduced petroleum as sources for petrochemicals, decreasing production of butadiene).

Reasons for Section II shortages can be broadly categorized as: 

1.  Mining not keeping up with demand: none
2.  Production not keeping up with demand: butadiene
3.  Government regulations: none
4.  Sources no longer available:  none
5.  Insufficient imports:  none
6.  Supply not keeping up with demand:  lumber