7/18
军火和化学品生产商Olin Corp(代號:OLN) 的业务量正在节节攀升，机关公司的氯、苛性钠和次氯酸钠业务却罕有人知，但是公司的chlor alkali业务却占到销售额的72%，利润的87% 。公司一年前收购了Pioneer Cos，作为其chlor alkali的专业生产商。chlor alkali的生产包括氯和苛性钠，这两者还使用于工业漂白。氯是塑料的原材料，主要用于房屋建设的塑料制品中。而苛性钠则是生产纸浆和制造清洁剂、肥皂和化学产品的主要原料。
chlor alkali业务为公司带来了强劲的价格和利润优势，公司CEO Joseph Rupp表示。Morningstar分析师Ben Johnson认为氯和苛性钠两大市场正在上演强强联合的双城记，苛性钠的价格在过去一年中飙升了80%，去年6月中旬的价格达到每吨345美元，月底飙升至615美元，这极大地促进了公司的销售额。同时，氯的价格下降了40%至每吨165美元。由于公司的业绩是氯和苛性钠联合作用的，因此不能只看后者价格上涨而不顾前者价格下跌。
公司一季度的货运量攀升了50%，但是由于苛性钠的市场需求较脆弱，货运量同比下降了11% 。苛性钠的需求量显示经济基本面依然较脆弱。虽然本季度苛性钠货运量没有下降，主要由于美元走软，进口数量开始缩紧，海外需求开始旺盛。
一季度公司销售额上涨了56%至3.991亿美元，主要归功于较高的市场需求。每股收益上涨了85%至0.50美元。Thomson Reuters分析师预期08年每股收益将上涨34%至2.03美元，09年将上涨8%至2.20美元。
Olin最大的竞争对手包括Dow Chemical(代號:DOW) , Occidental Petroleum(代號:OXY)以及PPG Industries(代號:PPG)。但是Olin的规模决定其终将获得价格优势。分析师认为公司的电力成本远低于其它同行，这是由于公司使用的天然气很少，更多使用水力电气、每桶和新能源，而天然气价格目前处于飙升阶段。公司的耗能优势为其节省了巨大的开支。
可以说，旺盛的市场需求、充足的货运量加上产品价格上涨，这些因素促进公司一季度利润上涨23% 。尽管铅和铜的价格有所上涨，但是公司都将成本有效地转嫁给了客户方面。
Investor's Business Daily
Ammo Is Its Best-Known Product, But Bleach Is The Profit Center
Thursday July 17, 5:55 pm ET
Steve Watkins Olin has been going great guns with its ammunition business.
But a little-known product called caustic soda is really driving the firm's growth these days.
Winchester ammunition is the better known of Olin's (NYSE:OLN - News) products. But its chlor alkali business makes up 72% of sales and 87% of profit.
Its year-ago acquisition of Pioneer Cos. made it much more of a pure play in chlor alkali.
That deal lifted Olin from the fourth-largest producer of chlor alkali in North America to third. It's now the largest producer of industrial bleach.
Chlor alkali consists of chlorine and caustic soda, which are the end products made from the process of basically running electricity through salt water.
Combined, they are used to make industrial bleach.
Chlorine on its own is used as a raw material for plastics. Caustic soda is used in the pulp and paper industry and to make detergents, soaps and chemicals.
Rising Prices
Better pricing and gains from Pioneer drove growth in the chlor alkali unit, CEO Joseph Rupp said on a conference call to discuss first-quarter earnings.
It's been a tale of two markets within chlor alkali for Olin, says Morningstar analyst Ben Johnson. Caustic soda prices have soared, jumping 80% in the past year.
They were around $345 a ton in mid-June last year and hit $615 a ton last month. That gives sales a huge boost.
"The caustic soda market has been on a tear," Johnson said.
At the same time, chlorine prices plunged more than 40%, to $165 a ton. Because both are made together in the production process, the prices work in tandem. You can't just make one and not the other.
Still, the reined-in supply and less imports of caustic soda that helped lift prices gave Olin a shot in the arm, Johnson says.
"Strong caustic soda pricing is helping these guys keep their heads above water for now," Johnson said.
The strong results have all been due to pricing.
"Volume growth has been nothing to write home about," Johnson said.
Shipment volumes jumped 50% in the first quarter, says Rupp, who declined to be interviewed for this story. But when counting Pioneer's year-ago results, volumes slumped 11% because chlorine demand was so weak.
Chlorine demand typically slows when the economy does, says Mary Blackburn, director of chlor alkali and vinyl studies at consulting firm Chemical Market Associates Inc.
Chlorine is used for plastics, such as PVC pipe, which is big in housing construction. That has tanked and taken chlorine demand with it, hurting pricing.
Caustic soda demand typically follows chlorine by a quarter or two, Blackburn says. This time it hasn't fallen, partly because of the weak dollar. Caustic soda is used a lot by manufacturers, and the weak dollar has them busy meeting foreign demand.
That has pushed imports down, causing tight supplies to go with steady demand.
Those two parts of the business spell good times for chlor alkali firms.
Caustic soda makes up a larger part of margins than chlorine does because more of it is produced at any one time.
"When caustic is rising as rapidly as it has, it gives chlor alkali a good margin boost," Blackburn said.
Indeed. The return on investment for these companies, a gauge of their profit as a share of their capital investment in their assets, averaged 6.5% from 1999 to 2002. Now it's 60%, Blackburn says.
Cost cutting has played a big role. The industry has cut capacity by more than 10% since 2000.
"There's a lot more discipline," Blackburn said.
As a result, she expects the good times to continue, thanks partly to four price increases put in place since April.
"We expect chlor alkali producers to have very good margins in the U.S.," she said.
Johnson does not agree. He sees the dynamics driving higher prices as fleeting -- that when production capacity comes back on line and imports return, prices will fall.
Either way, first-quarter sales jumped 56% to $399.1 million, thanks partly to the Pioneer deal. Earnings soared 85% to 50 cents per share. Analysts polled by Thomson Reuters expect full-year profit to climb 34% to $2.03 and to gain 8% next year to $2.20.
Olin's largest rivals are Dow Chemical (NYSE:DOW - News), Occidental Petroleum (NYSE:OXY - News) -- the two larger chlor alkali firms -- and PPG Industries (NYSE:PPG - News).
Hydroelectric Power
Olin's size helps it gain pricing leverage, Blackburn says.
She also figures it has an edge by putting cheaper technology in some plants.
And its electrical costs are lower than some rivals because it uses less natural gas, for which prices have soared, and more hydroelectric, coal and nuclear energy sources.
The smaller of Olin's units, Winchester, carries a powerful brand name and solid results. It recently won sizable ammunition contracts with the military.
Better volumes, coupled with higher prices, boosted its profit by 23% in the first quarter.
Lead and copper costs have soared, and the company has passed those along to customers.
It's not seeing a slump in commercial demand.
"We're starting to see some trading down to -- no pun intended -- a lower caliber of ammunition," Johnson said.
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