A few chemical companies are lined up to report their quarterly numbers tomorrow. An upswing in end-market demand from the coronavirus-induced downturn is likely to have aided the performance of chemical companies in the second quarter.
The chemical industry bore the brunt of demand shocks for much of the first half of last year as global industrial activities were put to a halt amid the pandemic. Containment measures by governments across the globe to stem the spread of infection paralyzed industrial activities and gutted demand for chemicals across the major end-use markets such as construction, automotive and electronics.
Notably, disruptions associated with the pandemic hurt chemical demand in China, a major consumer, as industrial activities in the country took a blow due to lockdown restrictions. Moreover, a slowdown in industrial and manufacturing activities due to lockdowns affected the demand for chemicals in North America and Europe.
However, the chemical industry has bounced back strongly from the virus-led slowdown on an uptick in demand in the key markets, a strong economic rebound in China and the reopening of the major economies around the world. Demand for chemicals started to pick up in the September quarter last year with a rebound in global economic activities. The upturn in demand is being driven by an upswing in manufacturing and industrial activities globally. The recovery gained further momentum during the first half of 2021.
A rebound in the major markets is likely to have spruced up demand for chemicals in the second quarter. Higher industrial demand is expected to have boosted sales volumes and the top line of chemical companies in the quarter.
However, chemical companies’ second-quarter results are expected to reflect some impact of raw material cost inflation as well as higher supply chain and logistics costs partly due to the lingering impacts from the devastating winter storm in the U.S. Gulf Coast. Extreme weather across Texas and Louisiana, and power outages disrupted the supply of feedstocks.
Nevertheless, the benefits of strategic measures, including cost management and productivity improvement, acquisitions, and actions to raise selling prices to counter cost inflation, might reflect on the second-quarter results of the companies in this space.
Per the Zacks industry classification, the chemical industry falls under the broader Basic Materials sector. Basic Materials is among those sectors that are expected to deliver positive earnings growth in the second quarter. Overall earnings for the sector are projected to rise 270.3% on 46.2% higher revenues, per the latest Earnings Trends. The projections reflect an improvement from an 80.4% rise in earnings on a 12.2% increase in revenues that was witnessed in the first quarter.
We take a look at four chemical companies that are gearing up to report their second-quarter results on Aug 3.
DuPont de Nemours, Inc. DD will report earnings numbers before the bell. Our proven model predicts an earnings beat for the company this time around. This is because it has an Earnings ESP of +3.81% and a Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Zacks Consensus Estimate for revenues for the second quarter is currently pinned at $4,003 million, suggesting an expected year-over-year decline of 17.1%. The consensus estimate for earnings is 94 cents.
The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters. In this timeframe, it delivered an earnings surprise of around 13.6%, on average.
Benefits of cost-savings and productivity actions are expected to get reflected on DuPont’s results. The company is also expected to have benefited, in the second quarter, from strong demand in semiconductor technologies and smartphones. Higher demand in the water solutions, automotive and residential construction markets is also likely to have supported its performance. (Read more: DuPont Warms Up to Q2 Earnings: What's in the Offing?)
DuPont de Nemours, Inc. Price and EPS Surprise
DuPont de Nemours, Inc. price-eps-surprise | DuPont de Nemours, Inc. Quote
FMC Corporation FMC will report results after the closing bell. Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for FMC’s second-quarter sales is currently pegged at $1,228 million, which suggests a 6.3% rise year over year. The consensus estimate for earnings is $1.77.
The company beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of 4.4%, on average.
Healthy demand and new product launches are likely to have supported the company’s performance in the second quarter. However, the company’s results are likely to have been affected by higher supply-chain and input costs. (Read more: FMC Corp to Post Q2 Earnings: What's in the Cards?)
FMC Corporation Price and EPS Surprise
FMC Corporation price-eps-surprise | FMC Corporation Quote
Westlake Chemical Company WLK will report earnings numbers before the bell. Our proven model predicts an earnings beat for the company this time around. This is because it has an Earnings ESP of +1.50% and a Zacks Rank #1.
The Zacks Consensus Estimate for Westlake Chemical’s second-quarter revenues is currently pinned at $2,467 million, which indicates a 44.4% year-over-year increase. The consensus estimate for earnings is $3.80.
Westlake Chemical beat the Zacks Consensus Estimate for earnings in all the last four quarters. The company has a trailing-four quarter earnings surprise of 319.6%, on average.
The company’s earnings are likely to have benefited from higher demand for polyethylene, polyvinyl chloride resin and downstream building products on strong markets for the downstream uses of its products, including residential construction, packaging and healthcare. It is expected to have gained from higher demand in its polyethylene business in specialty applications, especially food packaging. (Read more: Westlake Chemical to Post Q2 Earnings: What's in Store?)
Westlake Chemical Corporation Price and EPS Surprise
Westlake Chemical Corporation price-eps-surprise | Westlake Chemical Corporation Quote
Quaker Chemical Corporation KWR will report results after the closing bell. Our proven model does not conclusively predict an earnings beat for the company. This is because it has an Earnings ESP of +0.22% and a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for second-quarter sales for Quaker Chemical is currently pegged at $391 million, which suggests a 36.7% rise year over year. The consensus estimate for earnings is $1.50.
The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 54.2%.
Benefits of cost-saving actions, contributions of acquisitions, healthy end-market demand and price increase initiatives are likely to reflect on its results. However, higher raw material prices are likely to have affected its second-quarter performance.
Quaker Chemical Corporation Price and EPS Surprise
Quaker Chemical Corporation price-eps-surprise | Quaker Chemical Corporation Quote
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