|
|
 | | | |
- close
- close
- close
- close
Cytec Industries (CYT) |
Suggest other news sources for this topic
WIKI ANALYSIS
Cytec Industries manufactures and sells chemicals and carbon composites. Its chemical segments make products used in applications like industrial coatings and adhesives, and the company's carbon composites are used for parts in aircraft.[1]
Oil and natural gas are important indirect raw materials for many of Cytec’s chemical products in both the Specialties segment and the Building Block segment.[2] Cytec's profit margin is largely determined by the prices of these commodities.
Cytec's Engineered Materials segment has been buoyed by aerospace demand.[3] One downside to making carbon composites is the high cost of carbon fiber.[4] To contend with rising prices of raw materials, Cytec has raised the prices of its own products across every business segment.[5]
Company Overview
Cytec operates 43 research and manufacturing facilities in 18 countries all over the world.[6] The company synthesizes chemicals and manufactures materials which it sells to third parties through a direct sales force and distributors. Cytec serves diversified markets, including coatings & inks (43% of 2009 sales), aerospace (21% of 2009 sales), chemical processing (13% of 2009 sales), mineral processing (8% of 2009 sales), adhesives (4% of 2009 sales), and plastics (4% of 2009 sales).[7]
Business and Financial Metrics
First Quarter 2010 Results[8]
Cytec announced earnings for the first quarter of $24.8 million, or $0.50 per diluted share. Net sales were $787 million. Included in the quarter are several special items that total $7.9 million of net expense after-tax, or $0.16 per diluted share. Excluding these special items, net earnings were $32.7 million, or $0.66 per diluted share.
Net loss for the first quarter of 2009 was $0.1 million, or $0.00 per share. Revenues in the first quarter of 2009 were $612 million. Included in the quarter were several special items that totaled $2.8 million of net expense after-tax, or $0.06 per diluted share. Excluding these special items, net earnings were $2.7 million, or $0.06 per diluted share.
Business Segments[7]
Building Block Chemicals (13% of 2009 sales)
Building Block Chemicals are manufactured Cytex's Fortier facility. This segment’s product lines include acrylonitrile, hydrocyanic acid (a co-product of acrylonitrile), sulfuric acid, acetonitrile and melamine which is produced both for use internally within its other segments and for third party sale.
Cytec expects to sell up to approximately 15% of its current acrylonitrile production to an international trading company under a long-term distribution agreement at a market based price. Another 30% is expected to be sold to Kemira Group under long-term agreements to make acrylamide and the remainder is sold within the United States or exported to international markets principally in Europe and Asia depending upon selling prices in the regions.
Cytec is the only manufacturer of melamine in North America and about 30% of its approximately 150 million pound capacity is used internally to make amino cross-linkers. Cytec's ability to manufacture melamine at a competitive cost depends primarily on the cost of ammonia (which is dependent on the cost of natural gas) and freight rates.
Building Block Chemicals and its competitors tend to operate their plants at capacity even in poor market environments, which may result in strong downward pressure on product pricing.
Engineered Materials (26% of 2009 sales)
Sales in this segment are dependent on the commercial and military aircraft build-rates and the number of applications and aircraft programs. The majority of commercial aircraft programs in the western world use Cytec's products. Cytex is a major supplier to such U.S. military programs as the F-35 Joint Strike Fighter, the F/A-22 and F/A-18 combat aircraft and the C-17 transport aircraft.
Cytec's Engineered Materials segment manufactures and sells advanced structural film adhesives and advanced composite materials primarily to the aerospace industry. The primary applications for both aerospace adhesives and advanced composites are large commercial airliners, regional and business jets, military aircraft (including rotorcraft, satellites and launch vehicles), high-performance automotive, marine and specialty applications. Advanced composites are exceptionally strong and lightweight materials manufactured by impregnating fabrics and tapes made from high performance fibers (such as carbon fiber) with epoxy, bismaleimide, phenolic, polyimide and other resins formulated or purchased by Cytec.
In-Process Separation (10% of 2009 sales)
Cytec's mining chemicals product line is primarily used in applications to separate desired minerals from host ores. The company is a leader in the copper processing industry, particularly in the flotation and solvent extraction of copper.
Cytec's phosphine specialties are utilized for a variety of applications. The company is a leading supplier of ultra-high purity phosphine gas, used in semiconductor manufacturing and light emitting diode applications, and it has significant positions in various phosphine derivative products including phosphonium salts used in pharmaceutical catalysts and biocides.
Additive Technologies (8% of 2009 sales)
Cytec is a global supplier to the plastics industry of specialty additives which protect plastics from the ultraviolet radiation of sunlight and from oxidation. Cytex is a leading global supplier of sulfosuccinate surfactants, Docusate sodium, acrylamide-based specialty monomers, and PTZ phenothiazine. Sulfosuccinate surfactants and acrylamide-based specialty monomers products are used in emulsion polymers, paints, paper coatings, printing inks, and other diverse customer applications. Docusate is a pharmaceutical grade product used as both an active ingredient and excipient/ formulating aid. PTZ phenothiazine is primarily used as an acrylic acid, acrylic ester and methacrylate monomer stabilizer.
Coating Resins (43%)
Cytec is a leading producer of environmentally friendly, radiation-cured resins for high-performance coatings and graphics applications. Products such as inks, compact discs, DVDs, flat panel displays, credit cards, packaging, parquet and furniture utilize advanced resins.
Cytec manufactures a broad range of waterborne and solventborne resins. It is a market leader in resins for high-solids and waterborne coating systems. Its extensive portfolio includes products based on seven chemistries: acrylics, amino cross-linkers, epoxy systems, alkyds and polyesters, urethanes, phenolics and unsaturated polyesters. W
Trends and Forces
Strong aerospace demand boosts sales for Cytec's Engineered Materials segment
The aerospace industry is becoming increasingly dependent on carbon fiber composites, which are lighter and stronger than conventional metals.[9] In addition to supplying composites for companies in the commercial aerospace market like Boeing and Airbus, Cytec’s Engineered Material’s segment is a supplier to military programs such as the F-35 Joint Strike Fighter, the F/A-22 and F/A-18 combat aircraft and the C-17 transport aircraft.[10][11] From 2001 to 2008, spending by the Department of Defense has increased 74%.[12]
Growth in "Very Light Jet" market creates demand for carbon composites
The Very Light Jet, or VLJ, is becoming an increasingly popular alternative for corporate fliers. The VLJ is half as cheap as the traditional corporate jet[13] and more cost-effective than commercial airlines.[14] The price of VLJs range from $1 to $3 million.[15] Although some manufacturers continue to use aluminum frames and composites for secondary structures, many others are proceeding to produce VLJs with all-composite airframes, expanding the market for carbon fiber materials (like those made by Cytec).[15]
Rising prices for oil and natural gas...
...directly increase raw material costs for Cytec's chemical segments
Oil and natural gas are important indirect raw materials for many of Cytec’s chemical products in both the Specialties segment and the Building Block segment. To combat the increase in raw material prices, Cytec will pass on these price increases to their customers by increasing the prices of their products.[16]
...indirectly increase demand for carbon composites from Cytec's Engineered Materials segment
Increases in the price of crude oil is driving up fuel prices.[17] To make their products more fuel-efficient, manufacturers of planes and automobiles are turning to carbon composites as the alternative to traditional steel and aluminum parts.[18] Carbon composites are lighter and non-corroding.[19] The VLJ market, which is trending toward all-composite airframes, expects to deliver 15,000 aircraft by 2015.[15]
Competition
Competitors of Cytec’s chemical businesses include:
- BASF SE (BASFY) – World’s largest chemical company by sales.[20]
- Braskem SA (BAK) - An integrated petrochemical cracker and thermoplastics producer in Brazil and Europe.
- Dow Chemical Company (DOW) – Manufactures and sells chemicals, plastic materials, agricultural, and other specialized products and services worldwide.
- DuPont (DD) – Chemical and technology conglomerate. Products include Kevlar, Teflon, and genetically enhanced plant seeds.
- Hercules (HPC) - Manufactures and markets specialty chemicals and related services for business, consumer, and industrial applications worldwide.
- Hexcel (HXL) – Advanced structural materials company. Products include resins, adhesives, and laminates.
- H. B. Fuller Company (FUL) – Worldwide manufacturer and marketer of adhesives, sealants, paints and other specialty chemical offerings.
- Sigma-Aldrich (SIAL) - Produces and sells a broad range of biochemicals, organic and inorganic chemicals and related products.
| Manufacturer | Net Sales |
|---|---|
| Cytec Industries Specialty Chemicals and Building Block Chemicals Segments | $2,834[3] |
| BASF SE (BASFY) | $91,891.81[21] |
| Braskem SA (BAK) | $9,774.30[22] |
| Dow Chemical Company (DOW) | $53,513[23] |
| DuPont (DD) | $30,653[24] |
| Hercules (HPC) | $2,136.20[25] |
| Hexcel (HXL) | $1,171.1[26] |
| H. B. Fuller Company (FUL) | $1,400.26[27] |
| Sigma-Aldrich (SIAL) | $2,038.70[28] |
The leading carbon fiber companies are competitors of Cytec’s Engineered Materials Segment. They include:
- Hexcel (HXL) – Hexcel is the largest producer of carbon fiber in the US.[29]
- Mitsubishi Rayon Co., Ltd. – Produces carbon fibers, intermediate materials, and fabricated composite products.
- SGL Technologies – Produces oxidized fiber, partially carbonized fiber, and heavy-tow carbon fiber.
- Toho Tenax Co., Ltd. – Mass-produces polyacrylonitrile based fibers.
- Toray Industries Inc (TRYIY) – One of Toray’s business segment is Carbon Fiber Composite Materials.
- Zoltek (ZOLT) – Has 85% of the commercial aircraft brake pad market. [30] Producer of wind turbine blades.
Toray, Mitsubishi Rayon and Teijin, Ltd. have 70% of the world's carbon fiber market share.[31] Toray alone has 30% of the world's carbon fiber market share.[32]
| Manufacturer | Net Sales |
|---|---|
| Cytec Industries Engineered Materials Division | $669.8[3] |
| Hexcel (HXL) | $1,171.1[26] |
| Mitsubishi Rayon Co., Ltd. – Carbon Fibers & Composite Materials, Membranes and Others | $944.7[33] |
| SGL Technologies – Carbon Fibers & Composites Unit | $257.18[34] |
| Toho Tenax Co., Ltd. | $246.52[35] |
| Toray Industries Inc (TRYIY) – Carbon Fiber Composite Materials Segment | $780.43[36] |
| Zoltek (ZOLT) | $150.88 [37] |
References
- ↑ Cytec 10-K 2007: P.3-7
- ↑ Cytec Announces Second Quarter 2008 Results
- ↑ 3.0 3.1 3.2 Cytec 10-K 2007: P.18
- ↑ Cytec 10-K 2007: P.2
- ↑ Cytec Announces Second Quarter 2008 Results
- ↑ Cytec 10-K 2007: P.12
- ↑ 7.0 7.1 7.2 7.3 Cytec Annual Report 2009
- ↑ Cytec: "Cytec Announces First Quarter 2010 Results" April 22, 2010
- ↑ Fibre reinforced composites in aircraft construction
- ↑ Cytec Annual Report 2007: P.6
- ↑ Cytec Annual Report 2007: P.21
- ↑ U.S. Federal Budget 2008 P.5
- ↑ Feeling the Need for Speed
- ↑ Very Light Jets Creating A Demand For Composites
- ↑ 15.0 15.1 15.2 Very Light Jets Are Taking Off from Ultralight Living
- ↑ Cytec Announces Second Quarter 2008 Results
- ↑ Soaring Gasoline, Diesel, and Crude Oil Prices
- ↑ Recyclable Carbon Fiber: Extreme Fuel-Efficiency
- ↑ Advantages of Carbon Composites
- ↑ Competitors: Chemical Companies Ranked by Chemical Sales
- ↑ BASF SE - Key Financial Data
- ↑ Braskem SA - Income Statement
- ↑ Dow Chemical Company – Income Statement
- ↑ DuPont – Income Statement
- ↑ Hercules – Income Statement
- ↑ 26.0 26.1 Hexcel Annual Report 2007: Selected Financial Data P.12
- ↑ HB Fuller Co. – Income Statement
- ↑ Sigma-Aldrich – Income Statement
- ↑ About Hexcel
- ↑ Zoltek Rewards True Believers
- ↑ Carbon fiber makers see broad use of it in cars
- ↑ Carbon fiber makers see broad use of it in cars
- ↑ Mitsubishi Rayon Annual Report: Business Performance Breakdown by Segment P.12
- ↑ SGL Annual Report 2007: Business Unit Performance P.59
- ↑ TOHO Tenax Annual Report: Review of Operations P.4
- ↑ Financial Data: Business Segments
- ↑ Zoltek Annual Report 2007: Management’s Discussion & Analysis P.8
| |||||||
