Prospect of Chemical Manufacturer

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Albemarle Corporation (NYSE: ALB) develops, manufactures, and markets engineered specialty chemicals in the United States as well as worldwide. In 2012, it continued to deliver strong returns for its shareholders and build an even stronger foundation for sustainable long-term growth. Moreover its Hydro processing catalysts segment finished 2012 with outstanding performance year-over-year, as the segments fourth quarter net sales went up by 61% and profits were up by 85%.

Latest Outcome

In 2012 it was honoured as a responsible care company of the year by the American Chemistry Council, and further it also marked a great end to year with its robust performance as it delivered solid earnings even during tough economic environment, by sticking to its strategy and managing its cost well.  It closed its year by delivering fourth quarter net income, excluding special items, of $105 million, or $1.17 per share, as compared over $1.13 per share in the fourth quarter of 2011. The full year earnings were of $436 million or $4.85 per share versus $4.88 per share in 2011. Net sales for the quarter totalled at $688 million while EBITDA excluding special item was $160 million. Overall, Albemarle’s balance sheet remained strong with net debt of $205 million and Net working capital as a percentage of sales ended the year roughly 300 basis points higher at 21%.

Upcoming Expectations

In 2012 it invested not only for expansion but even for growth and as a result of which it will have a head win in the first half of 2013, as soon as it starts all its projects and get products from those units qualified at customer’s project commercial productions and sales in the second half of the year. Its average estimate for revenue in the next quarter is $724.7 million. On the bottom line, the average EPS estimate is $1.22. From a capital expenditure standpoint, Albemarle’s each major project is nearing its completion. The Bromide, HBR and clear completion fluid phases of its expansion in Jordon are on track and are set to start production in the first half of 2013. It is expected that its Capital Expenditures will decline to somewhere between $150 million to $175 million and its operating cash generation will lie in the range of $500 million to $550 million. The Future seems solid, however the ability to grow year-over-year will depend somewhat on macroeconomic trends.

Antagonist

Chemtura Corporation (NYSE: CHMT) is a global manufacturer and marketer of specialty chemicals, agrochemicals and pool, spa and home care products. It has recently entered into a joint development agreement with Caterpillar Inc. (NYSE: CAT) for novel applications of Chemtura’s Duracast, hot-cast urethane pre-polymer technology for construction and mining equipment. This joint development agreement focuses on several novel applications in construction and mining equipment. Prototype development is under way with field evaluation expected to begin by early 2013. On the other hand, over the past 12 months, Chemtura generated $46.0 million cash while it booked net income of $115.0 million. That means it just turned 1.5% of its revenue into free cash Flow, which doesn't sound so great.

W.R. Grace (NYSE: GRA) is a global specialty chemical manufacturer with products ranging from building materials to industrial catalysts. It recently named Richards R. Badmington as Vice President of Corporate Communications. Badmington will lead a global communications team and be responsible for media relations and will bring tremendous breadth of experience to Grace. Further the successful acquisition of Noblestar’s assets in Qingdao is another milestone in Grace’s long relationship with China. Hence its Long-term prospects are promising and therefore Albemarle should mark a check on it.

Bottom-line

Albemarle has recently repurchased over 1.1 million shares of stock and increased dividends to shareholders for the 18th straight year. Even with increased cash expenditures, it ended the year with the strongest balance sheet in its history and has the financial flexibility to continue to fund growth opportunities and return cash to shareholders. Moreover it has the right people in place to execute its strategy. Hence the shares of Albemarle should be added into ones portfolio for long term in order to reap benefits.


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