Wednesday July 15, 11:29 am Eastern Time (1-2 "Partnership Declares No Distribution" --Marty)
Company Press Release
Partnership Declares No Distribution
Borden Chemicals and Plastics Posts Weak Results For Second Quarter
Amidst Continued Industry Downturn
COLUMBUS, Ohio--(BUSINESS WIRE)--July 15, 1998--Borden Chemicals and Plastics Limited Partnership (NYSE:BCU - news) today reported a loss of $7.8 million, or 21 cents per unit, as its three lines of business continued to be hampered by poor margins as part of an ongoing industry downturn.
The second quarter loss for the manufacturer and marketer of polyvinyl chloride (PVC) resins, methanol and derivatives, and nitrogen products compares to the year-ago period's net income of $21.2 million, or 57 cents per unit, and this year's first quarter loss of $8.3 million, or $0.22 cents per unit.
''Lower costs for our key raw materials when compared with the previous quarter and year-ago period were more than offset by weaker average pricing for PVC resins and methanol, our two largest businesses,'' said Joseph M. Saggese, chairman, president and chief executive officer for the general partner, BCP Management, Inc. ''A basic oversupply of product, combined with continued weakness in Asian export markets, offset steady domestic demand and kept downward pressure on pricing throughout the quarter.''
The partnership did not declare a cash distribution for the second quarter period, compared to a distribution of 45 cents per unit for the second quarter last year. As the partnership had announced
at the end of the first quarter, cash distributions are doubtful for the remainder of 1998.
For the second quarter period ended June 30, the partnership posted revenues of $146.3 million, 23 percent less than the year-ago period revenues of $189.8 million and down from first quarter revenues of $153.5 million. The year-over-year revenue decline resulted primarily from lower average selling prices for PVC resins and methanol, which decreased 20 percent and 41 percent, respectively, when compared to the same period last year.
For the six months ended June 30, the partnership recorded a loss of $16.1 million, or 43 cents per unit, on revenues of $299.8 million, compared with net income of $16.8 million, or 45 cents per unit, on revenues of $384.5 million for the same period in 1997.
During the second quarter, PVC resin margins improved slightly from the first quarter but were off significantly from the year-ago period. Average PVC resin prices slipped from the already depressed levels reached in the first quarter. The average cost of key raw materials chlorine and ethylene declined when compared to both the first quarter and the year-ago period. Sales volumes were up slightly from the first quarter but down 3 percent from the same period last year.
Average methanol pricing was significantly lower than both the first quarter and the year-ago period, stabilizing at depressed levels for much of the quarter before dipping slightly again in June. Sales
volumes were flat with the first quarter and down slightly from last year's second quarter.
The industry average price for natural gas at the Henry Hub settlement point was $2.20 per mmbtu for the quarter, compared with the previous quarter's average hub price of $2.21 per mmbtu and the year-ago period's average of $2.10 per mmbtu. Natural gas is a key raw material and energy source for the partnership. Partnership costs may differ from the industry Henry Hub average price for various reasons including purchasing practices, contract arrangements, transportation costs and other factors.
Average selling prices for nitrogen products ammonia and urea increased when compared to the first quarter due to seasonal strength from the spring planting season, but were well below year-ago levels. Sales volumes also showed seasonal strength, with totals well above the first quarter but flat when compared with the same period last year.
''Our industry appears as if it will continue to be in a situation of overcapacity for the remainder of the year, which in all likelihood will keep pressure on pricing and margins,'' Saggese said. ''We are
continuing our efforts to effectively manage operating and raw material costs as we work through this cycle.''
Borden Chemicals and Plastics Limited Partnership operates facilities located in Geismar and Addis, La., and Illiopolis, Ill. BCP Management, Inc., a wholly owned subsidiary of Borden, Inc., has a 2
percent interest and serves as general partner. Publicly traded units account for the remaining 98 percent ownership.
See Attached Financial Statements
(http://biz.yahoo.com/bw/980715/borden_che_1.html) |
