Lyondell Basell 2Q17 Earnings Call Notes

Bhavesh Vaghjibhai Patel – LyondellBasell Industries NV

Operating rates at 95-99% of capacity

“Slide 5/6 illustrates our strong second quarter performance, with operating rates of 98% of nameplate capacity across our U.S. and European ethylene crackers. Our polyethylene production operated at 95% of capacity. And I’m particularly pleased to report the rebound in performance at our Houston refinery, where crude throughput rates increased to an average of 99% of capacity during the second quarter.”

Ehtylene prices have decreased

“During July, spot ethylene prices have decreased due to strong industry supply and increased inventories. After relatively light spring maintenance season, consulting services are predicting a return to typical levels of per-planned maintenance for September and October. Polyethylene markets are balanced, while polypropylene demand is relatively strong. No major maintenance is planned in our olefin system for the remainder of 2017.”

Markets are still relatively balanced

“Yes, I think markets are still relatively balanced here in the U.S. and globally. And so, as evidenced by initial reports of the rollover on polyethylene price here in July, I won’t hazard a forecast on the future. But I think we’re going into the second half of the year with pretty balanced markets and demand growing at a good pace globally. So I think that whatever lies ahead we’re going into it with very strong operating rates and very constructive markets.”

DuPont 2Q17 Earnings Call Notes

Ed Breen

Expect this to be our last call as DuPont

It’s with strong momentum that we have what we anticipate to be our last earnings news release and investor call as DuPont. Of course, this is not an ending but a beginning as we approach the expected August closing of the merger with Dow to form DowDuPont. This past quarter, we completed nearly all the steps needed to close the merger without any significant new remedies. When the final steps are completed, we will announce our expected closing date. We remain confident that the transaction will close in August.

Nicholas C. Fanandakis – E.I. du Pont de Nemours & Co.

Strength in electronics and communications

Yeah, let me handle that, Chris. So as you go forward looking at Electronics & Communications, as you said, you’re absolutely right, there were some rather lower comps that we were against. So part of it is that. But we have seen good, strong consumer electronics, semiconductor, as well as PV in the quarter and as we’re going forward. When I look beyond the second quarter in the rest of the year, we do expect continued moderate strength in some of these key markets, primarily the three that we talk about, consumer electronics, semiconductors and PV.

Are forecasting growth rates to be down in PV

“We are though forecasting growth rates to be down in the PV side due to some of the reduced government subsidies around the grid capacity constraints in China.”

James C. Collins – E.I. du Pont de Nemours & Co.

CRISPR products

Thanks, Laurence. Yes, our CRISPR strategy, I would say, is something that is still emerging. We’ve clearly identified a few early targets. We talked about our waxy corn program. I think I had mentioned it a little bit at several of the Ag conferences. So it will be our first commercial product. We’d expect that by the end of the decade. We’re beginning to work on a few other diseases that we think CRISPR could help us control.

One of those is northern leaf blight. You know how important or how big an impact that disease can be. I think I saw a number last year, could have been as high as $1.6 billion in North America alone. So what that’ll allow us to do is leverage our existing germplasm, but look for background germplasm where that trait or that natural disease resistance already exists and then use the CRISPR tool, just like we would any other advanced breeding technology, to breed our background germplasm in with that protection.”

Brazil watching closely how things develop

“I would say that, as we think about the second half of this year, especially in Brazil, we’re cautious on that market, just as growers are. They’re clearly watching to see how this North American crop develops. We’re in a real critical stage right now, where temperature can have a big impact at pollination on yields. So I think we’re all waiting to see how that turns out. That will naturally affect commodity prices for corn and soybeans. And those are two big drivers as to how the next season will unfold as well. So, as I said, it’s a little early to call it, and we’re watching things pretty closely.”

Monsanto 1Q17 Earnings Call Notes

10x as much VC investment in Ag as 5 years ago

“Our desire to expand the strong innovation core also stems from the myriads of game changing opportunities that we see in the horizon. We are very clearly entering a new era in agriculture. Hundreds of new entrants invested more than $4.5 billion of venture capital in agriculture in 2015, which is more than 10x the investment from just 5 short years ago. More players than ever are seeking to provide new technologies to growers to enhance productivity, both profitably and sustainably”

Brett Begemann

Growth in planted corn acres in Brazil and Arg

“n the first quarter, we saw greater than 25% increase in planted corn acres in Argentina and more than a 10% increase in corn acres planted in Brazil. This was accompanied by double-digit price increases and corn germplasm and local currency in both countries.”

Able to take price to offset some currency losses

” the change in the currency relationship created part of the opportunity to reach for some of the pricing improvements around double-digits. And by all means even double-digit did not bring back everything that we lost from the past with the currencies. So there is potential opportunity as we continue to look to the future there. At the same time what I think just are more important is the continued performance of our products down there. Intacta continues to do incredibly well.”

Pierre Courduroux

Strength in Southern Hemisphere business

” ongoing results came in better than the prior year on the strength of our Southern Hemisphere business. Our soybean gross profit is up by approximately 50% in the first quarter with 6 points of gross margin improvements, led by Intacta penetration and currency benefits. Corn gross profit grew by more than 30% due primarily to double-digit price mix lift in local currency in both Brazil and Argentina and from strong growth in acres planned in both countries.”

Robb Fraley

Should see gene edited products com into the market place by the middle of the next decade

“Sure, thanks. And it’s great question, PJ. So, may be just a little bit of background on the gene editing commentary. So, I think first of all as you recognize there is a variety of gene editing tools. There is protein base. There is nucleic acid base. And just in the last few weeks, there has been a couple of publications on two brand new gene editing systems that have been discovered. In any case, what these tools allow you to do is to go in and precisely change basically any base pair or any gene in the crop. And so there are very powerful tool for making precise changes. I think the other thing that’s important to highlight is you still need a world class breeding engine, a testing network in order to identify and evaluate the best combinations and those gene-editing traits are going to be introduced into corn and soybean and cotton stacked with the biotech traits that are defining the marketplace today. So, we see them very complementary to the breeding and trait engines that we have developed. And I think they will allow us to further accelerate that rate of gain. And I think the fact that we have now concluded licensing agreements with some of the major players and innovative technologies puts us in a great position to take advantage of these products. I mean some of the first gene editing products and some of the smaller crops are working their way through the regulatory system. As I indicated in my comments, we are now fully utilizing these tools and certainly by the beginning or middle of the next decade we will see these gene-editing products work their way into the marketplace. Really an exciting technology and I think we have created a strong position moving forward into the space.”

Lyondell Basell 3Q16 Earnings Call Notes

LyondellBasell Industries NV (LYB) Q3 2016 Results
Bhavesh Vaghjibhai Patel

Less scheduled maintenance in 2017 than 2016

“Turning to slide 14, I’d like to outline how LyondellBasell’s heavy maintenance schedule for 2016 compares to our relatively light plans for 2017. We typically have turnarounds at only two crackers in a given year. However, during 2016, we had four major cracker turnarounds and significant derivative turnaround activity. We also expanded the capacity of our Corpus Christi cracker by 800 million pounds. With this hard work completed during 2016, we have no cracker turnarounds scheduled during 2017.”

Continue to see strong demand growth

“The large population’s GDP growth and consumption trends seen in China, India and other emerging economies will continue to drive these markets towards higher consumption. We believe that polyethylene and polypropylene can maintain the 4% to 5% demand growth that we have seen for these products over the past 25 years.”

World demand has outpaced capacity additions

” world demand has outpaced capacity additions by an amount equivalent to three crackers, primarily due to growing demand in China. As a result, global markets have tightened. Even with the eight cracker equivalents forecast to come online in the United States by 2021, the forecast is relatively balanced over the next five years.”

Our sense is that Asia demand is growing

“Okay. Well, I think we’ll have to kind of see how demand develops and how oil prices develop, and so on. But certainly, Asian demand is growing to the extent that new capacity likely will be exported. So our sense is that, certainly through the first half of the year there’s not a lot of new capacity, more of the new capacity which is in the second half of next year. So we’ll just have to see how that develops. But our sense is that Asian demand is growing at a pace where that production will be needed overseas.”

Douglas J. Pike – LyondellBasell Industries NV

Ethylene prices more regional, polyethylene more global

Exactly. And, P.J., if you remember that the ethylene prices are much more regional, while polyethylene prices are more global in terms of how they are set. So spot price movements and the spot market is very thin in ethylene, so that has some influence.

Du Pont 3Q16 Earnings Call Notes

E.I. du Pont de Nemours & Co. (DD) Q3 2016 Results

Ed Breen

We’re deep in the merger process with the big regulators

“We’re very deep into the process with the four big regulators, the EU, Brazil, China, and the U.S. We’re deep into those conversations. So I think we’ve done a good job explaining our end markets and our businesses to the regulators. We’ve taken a lot of time educating them on that. There are rumors out there, which I’m not going to comment on, but I was sure there will be some remedies at the right time. And we are pre-working on that and very focused at Dow and DuPont on understanding that so we’re in a position to move really quickly when we need to. And, by the way, just this whole comment, just to put it in on perspective on the regulatory side, remember, we are first in line. I think even the EU Commissioner commented on that, that we review things in the order that we get those, in a recent statement. And I would also comment, just to put this in perspective, sometimes we lose sight, when you put Dow and DuPont Ag together, we’re going to be a strong number two in seed – not a number one, the number two – and in crop protection we’re putting the number four and number five player together to create a number three player. And our goal obviously through that is to have increased innovation and capability to improve our pipeline and speed up our products, both on the crop side and on the seed side, so – and we’re very confident we can do that. But I just want to kind of put that whole thing into a perspective.”

Looks like housing and auto are dropping off a bit

“I mean, it looks like all forecasts say that housing is dropping off – at least from a start standpoint – dropping off some in the three-month window or rolling window – July, August, September, looks like there was a decline of about 1.5%. So not significant, but it looks like there’s a little bit of a rollover off of kind of that 1.1 million to 1.2 million starts. So kind of flat to down a little. So you might see a little bit there.

And then on the auto side of the business, it looks like auto builds are going to be down in the couple percent range going into next year. So that’s a little bit of a drop from the 5% to 6% that we’ve kind of been running through the year. So you might see a little there. However, by the way, our demand still looks good for autos, specifically in China on the Performance Materials side of the business. But we are modeling a little bit of a downdraft in those couple end markets.”

James Collins

Still pretty challenging market in 2017 for farms. Favoring the soy market

“When we look at 2017, I think like others we’re predicting still a pretty challenging market as corn commodity prices continue to fall, and soybean’s a little bit unchanged. It’s favoring the soy market, and we are seeing some volatility in pricing in both of those.”

Platform Specialty (PAH) Q2 2016 Earnings

Platform Specialty (PAH) CEO Rakesh Sachdev called out oil and gas orders as notably weak

“Organic sales declined 2% driven primarily by weak demand from oil and gas end markets and continued softness in the electronics business in Asia.”

Expecting demand to strength in the latter half of the year

“We still expect the electronics demand picture to begin to turn in the second half of the year. Combined with some share gains that we are already seeing, I expect an improvement in the second half.”

Asia microelectronics business hopefully bottomed out during the quarter

“As everybody has been reporting this last quarter we do think we’ve seen pretty much of bottoming in electronics business in Asia with some slight growth in the second half of the year. The drivers are still the same as we have been talking about in the past new releases from Apple for example, etc.”

Their business will benefit as the amount of electronics into automobiles goes up

“We’re very, very confident about our position on a global basis for the auto industry as it relates to both industrial and our electronics business. Clearly electronics content in vehicles is going to continue to grow so regardless of the automotive production itself, the value or the opportunity for us per vehicle will continue to increase. We think we’re really well positioned for the expansion that the automakers are making in localized manufacturing and assembly in Mexico for example and parts of Southeast Asia and Eastern Europe. So even if growth rates of total numbers of units should slow versus the last three or four years, the available content to us per vehicle is going to continue to increase. So we’re very optimistic about the future and our position in the auto business on a global basis.”

Du Pont 2Q16 Earnings Call Notes

E.I. du Pont de Nemours & Co. (DD) Edward D. Breen on Q2 2016 Results

Sales grew 1% volumes grew 2%

” I am pleased about the improvement in our sales trend, given the challenging environment in which we are operating. Sales rose 1%, excluding currency and portfolio changes, with Agriculture and Nutrition & Health leading the improvement. Ag did better than expected in a very challenging market, and N&H grew despite the currency pressure. Volumes grew in half of our businesses and volumes grew in total by 2%.”

Scientists are using technologies like CRISPR to produce new products

“Another product of increased productivity and efficiency is freeing up capital to invest in R&D and growth. This is another priority for us. I’ll give you a few examples. To meet growers’ needs better, we are introducing higher-performing products like Zorvec fungicide and Leptra corn hybrids. We’re increasing capacity in faster-growing areas like Tyvek building wrap and medical packaging. Our scientists today are utilizing the newest technologies like CRISPR-Cas gene editing to develop targeted applications to deliver enhanced solutions and greater choice for our customers. In fact, we introduced over 600 new products in the first half of 2016.”

We think we’re still on track to complete the merger

“I think it came out that there might be some remedies. We always went into this saying we would be ready on remedies, if that were needed. So, we’re hoping that that helps out the timeline. So, having said that, I’m not naive. This is a huge merger. Although we are going to split into three, but it is a huge merger and I’m sure it’s going to get a thorough review. But looking at the timeline, I still think we’re on a timeline by the end of the calendar year to accomplish this.”

+1% feels good when you were running -2%

“I sure hate to brag about a sales number that’s around zero, but – and I’m not. We always want to strive to do better. But just to give a little backdrop, the reason it feels better is we were plus 1% organically. For the whole company, we were plus 2% on a volume basis. And the quarters before that, four or five quarters before that, organically, we were kind of running a negative 2%. So, we’ve seen a shift of about 3%, which is not insignificant. So, that’s really, I think, the key change there.”

Probably get a slight lift in electronics in the second half

“d electronics also is one where we’re seeing, on the consumer electronic side, probably I think as everyone else has been reporting for the last three to four months, softness on that end of the market. And we think that picks up slightly in the second half. Originally, we are planning a bigger lift, but we’ve kind of dialed that back a little, thinking we’ll just see a slight lift as we go into the holiday season.”

Nicholas C. Fanandakis – Chief Financial Officer & Executive Vice President

Operating earnings up 14% on 1% revenue growth

“Operating earnings of $1.24 per share increased 14% versus prior year and grew 18% year-over-year when adjusted for currency. Continued strong execution on cost savings across all businesses, lower product costs and volume growth drove improvement in the quarter.”

James C. Collins – Executive Vice President-Agriculture

Agriculture markets continue to face challenges

“Agriculture markets continue to face challenges. As farmers endure tough economic conditions, seed and crop protection suppliers have elevated inventories and credit remains tight.”

Not seeing any bad debt rates above normal

“Credit is one area that we constantly take a look at. We feel like we’re not seeing any kind of bad debt rates that are above anything that we would normally see. But we’re constantly watching it. What’s really happening is because of the lack of credit out there, growers are delaying a lot of their purchase decisions. And you sort of see that in our guidance for the second hal”

LyondellBasell 4Q15 Earnings Call Notes

LyondellBasell Industries NV (LYB) Bhavesh V. Patel on Q4 2015

Low priced feed and industry outages will be constructive for markets we serve

“we believe that we continue to benefit from abundant supplies of low priced feedstocks and from solid underlying demand for our products. Additionally, we anticipate that the heavy industry outage schedule for the first half of 2016 will continue to be constructive for the markets we serve.”

Global ethylene operating rates are probably 80-90%

“Global operating rates, you know our sense is that they’ve been averaging in the high 80%s to about 90%, excluding some of the unplanned outages. So, last year in the second quarter they probably drifted a little lower. I think in 2016, markets are going to be relatively balanced. In 2015 demand growth for ethylene nearly matched supply growth for ethylene. So market conditions look very similar. I think the thing we’re going to have watch is the level of unplanned outages that created the tight markets in second quarter.”

My sense is that customer inventories very are low

“throughout last year, as oil price declined and there was uncertainty about global economic growth, we saw our customers depleting inventory especially downstream of our polyolefins business. By the end of the year, our sense was, they were buying only what they needed and they were buying kind of one week at a time. So anecdotally, I would say that inventories are very low and we see even in the last week of January, when we saw oil prices move up a little bit, we had a certain sudden rush in terms of demand, both in Asia and in Europe. So my sense is inventory is very low.”

Polypropylene is a very tight market

“in the case of polypropylene, we see a very, very tight market, there is really not any new supply coming here in the U.S. So, I would expect that to continue. We’ve had years of fairly modest margins. And as you know, our company has significant leverage to polypropylene. We’re the largest polypropylene producer in the world. And so we’re very constructive about polypropylene.”

Customers not building inventory despite shutdowns

“I think, their sense is that the product is very available. That’s usually been the trend. The only time John that I have seen customers build inventory is when we had a couple of bad hurricanes come through Houston, I think that spooked people. And so prior to hurricane season they build for a year or two. But generally they don’t do that, we haven’t seen that.”

Flexibility of feedstocks is key

“I think flexibility is going to be the key and so we are investing incrementally to increase our flexibility to crack more propane, a few other feedstocks. And so, that’s what we want to retain longer-term. It is difficult to call two years, three years from now whether it will be ethane or propane. We want to make sure that we can crack meaningful amounts of the big feedstocks.”

I’m pretty constructive about demand growth

“I think demand is still – is developing quite nicely. Again as I mentioned earlier in one of the questions, we’re seeing buying activity pick up as we move towards the second half of January. And I would expect that this year we ought to see similar growth to last year. And frankly, if I’m right about lower inventories downstream, the higher – as the oil price incrementally stabilizes or moves up, we should see inventory replenishment downstream, which will add to demand growth year-over-year. So frankly, I’m pretty constructive about polyethylene growth here going into 2016. Frank, downstream, our customers don’t have a lot of inventory globally.”

Expect seasonal restocking in the March, April timeframe

“one thing that I think about is the balance between supply and demand, whether it’s regionally or globally and my sense is that we still have fairly balanced markets. While coming into a March, April, May timeframe, it will bring a seasonal uptick in demand, likely inventory restocking. I would imagine at some point oil price will reach some kind of a bottom and if that happens it will bring buyers back.”

Despite lack of confidence last year we still had demand grow more than 4%

“We’ve had – if you think about 2015, we had a year where not only there was lack of confidence on oil price, but also there were questions about economic growth in the U.S., and in China, and we are destocking, despite that polyethylene demand grew more than 4%. So that’s what makes me constructive.”

Monsanto FY 1Q16 Earnings Call Notes

Monsanto Company’s (MON) CEO Hugh Grant on Q1 2016 Results – Earnings Call Transcript

Start with the topic of industry consolidation

“I’d like to start the talk today with a topic of industry consolidation right at the beginning. First, we have an incredible standalone growth plan backed by our commitment to innovation and the industry’s broadest, deepest and most important pipeline. Second, we expect industry consolidation to continue and it should given the opportunities for significant synergies and value creation and R&D across the industry.”

Two of our largest competitors are combining

“Yes, two of our largest competitors recently announced that they’re combining but they’re also two of our largest technology licensees and we expect that to continue given the opportunities of our unparallel pipeline.”

Currency headwinds have gotten worse thanks to actions in Argentina

“the headwinds from currency and commodity prices that we outline at the start of this fiscal year have not yet abated, and in fact currency has become a much stronger headwind with the recent events in Argentina. We are pleased to see the early decisive approach of the new President and we believe that his actions, particularly the lifting of export taxes in grain will create longer-term benefits for agriculture for which we’re well positioned to participate. However, the approximate 35% to 40% devaluation of the Argentine peso is expected to create an estimated $0.20 to $0.25 charge in Q2”

Industry challenges mean that integration with Syngenta would be even bigger boost

“A lot has changed in the industry since last spring. The industry has gotten tougher and I would say we expected some of that. The operating environment has become tougher as well. And I think because of that, there’s a greater need now than there was last spring to be able to quantify what that opportunity would look like and quantify what that integrated platform would look like. So, engagement becomes more important now than it did before with Syngenta and we haven’t seen much progress on that front.”

Dow Dupont will change things

“I can’t really speculate. They are big. I think this makes them the biggest in the world, but as Rob said they are also a customer. So we will continue our licensing efforts with them. There’s clearly going to be a disruption how you bring two entities of this size together but I think that’s really more for them to comment on than us.”

Maintain innovation pipeline in tough times

“We’ve talked since last spring we’ve talked about continuing to focus on our core and as the industry as a sector goes through a tough time, you need to double down on that. We’re managing our costs but at the same time we’re not shorting on innovation. And I think we are more successful in that innovation drive than anyone else in the space, so I kind of like the cards that we hold. But I think there’s going to continue to be consolidation in this space when you see what’s happening with commodity prices today.”

Brett D. Begemann

Pierre Courduroux

Dr. Robert T. Fraley

Du pont 3Q15 Earnings Call Notes

E I du Pont de Nemours’ (DD) CEO Ed Breen on Q3 2015 Results

Agriculture remains challenging especially in Brazil

“In Agriculture near-term conditions remain challenging. Demand for seed and crop protection products primarily in Brazil further weakened in the quarter impacted by macroeconomic and competitive pressures. In Brazil where the planting season is in progress tighter grower profits and credits are causing growers to be more cautious in their spending.”

Interim CEO focused on cost structure, working capital and capital spending

“Since I took on the role of interim chair and CEO on October 16, we have been taking a hard look at our cost structure our working capital performance and our capital spending. While it is too early in our process to share a specific plan and metrics, we see opportunities for further improvement in all three areas”

We’re in a low to no growth environment, but not a disaster by any means

“look, things have clearly softened up, just look at every industrial company that’s reported this quarter. Having said that, I don’t think things are in any draconian situation. I think it’s just a low growth to no growth environment across some of the industrial spaces, that’s fine. We can operate well in that environment if we do the right things at our end that we need to do and when things pick up that’s great everybody. But, no, I don’t see a disaster out there by any means. But I think we’re in a kind of zero growth environment when you put all the pieces together and that’s fine.”

There needs to be some consolidation in the ag space

“I’m not naive about what’s going on in the ag space right now. I do think at some point there’s consolidation here that will occur. You saw some other announcements just this week from others.”

Taking a cautious view on ag in 2016

“I think the way I’d say that is were certainly taking a cautious view of 2016. We’re not expecting a big market recovery overnight. So — but we’ll talk more about the 2016 outlook and we get ready to talk about the 2016 plan.”

“everyone’s talking to everyone” in the ag industry about consolidation

“but you’ve seen all the activity in the last six months and one of the other ag players just this week saying they are looking at what they would do with their ag business and I’d also say one of them said everyone’s talking to everyone. That’s a true statement and we’re also — I am personally talking to the CEOs of some of the other companies. Something will give here on the ag side and I would say just looking at it consolidation should happen. ”

We’re in the bottom of the down cycle or hopefully close to it

“we’re in the bottom of the down cycle right now or hopefully close to it. So clearly there’s a big opportunity there. And everyone’s seen that.”

Drop off in PV solar in China

“when you look at electronics communications, consumer electronics was actually a strength in the quarter as was our Kevlar film business and the PV. Where the drop-off occurred was in the Solamet paste, also in the PV industry and largely service in AP, specifically China region. That’s where the greatest year-over-year decline occurred within the business.”