NEWTOWN SQUARE, Pa., April 21 /PRNewswire/ -- ARCO Chemical Company
(NYSE: RCM) reported first quarter 1997 net income of $48 million, or $0.50
per share. Earnings declined from first quarter 1996 results of $106 million,
or $1.10 per share. First quarter 1997 total revenues increased to $1,029
million from first quarter 1996 revenues of $982 million. Fourth quarter 1996
earnings were $64 million, or $0.66 per share, with total revenues of $979
million.
Commenting on the results, Alan R. Hirsig, President and Chief Executive
Officer, said, "With the expiration of a number of fixed margin MTBE (methyl
tertiary butyl ether) contracts, we had anticipated that 1997 would be a
challenging year for ARCO Chemical. During the first quarter, high raw
material costs, coupled with weak product pricing, compressed margins in
virtually all of our businesses. However, sales volumes were strong in our PO
(propylene oxide) derivatives businesses."
Mr. Hirsig further commented, "ARCO Chemical has a world class asset and
technology base and strong positions in each of its major business lines.
Everyone in the company is aggressively focusing attention on opportunities to
provide long-term value to our shareholders and mitigate the profit
fluctuations inherent in some of our commodity businesses."
"As part of this effort, we have recently announced several initiatives,"
Hirsig continued. "The company has adopted economic profit, or value above
the cost of capital, as our key financial measure. Future compensation will
be directly tied to this measure. In addition, executive management will be
required to own company stock at levels of one to four times base salary.
Also, we are implementing a broad scale program designed to increase
efficiency and to achieve a very substantial reduction in structural costs."
Mr. Hirsig concluded, "Delivering performance and value to our
shareholders remains our highest priority. We are moving forward aggressively
with the implementation of our long-term strategy seeking to create profitable
growth in our core PO and related businesses. These cost reduction and
efficiency improvement efforts are designed to position the company to achieve
these objectives and to compete successfully in our markets in the years
ahead."
ARCO Chemical is a leading worldwide manufacturer and marketer of PO and
derivatives and other intermediate chemicals. Its products are used in a wide
range of consumer and industrial goods, including automotive components,
cushioning, paints and coatings, plastics, home furnishings, engine coolants
and reformulated gasoline.
ARCO CHEMICAL COMPANY
Selected Financial Data
(Millions of dollars, except per share data)
Three Months Ended March 31
(Unaudited)
1997 1996
Sales and other operating revenues $1,029 $982
Costs and other operating expenses 844 730
Gross profit 185 252
Selling, general and administrative
expenses 68 63
Research and development 21 18
Operating income 96 171
Interest expense (22) (22)
Other (expense) income, net(A) ( 1) 9
Income before income taxes 73 158
Provision for income taxes 25 52
NET INCOME $48 $106
Net income per common share $.50 $ 1.10
(A) Primarily interest income, results from equity investments, foreign
exchange gains and losses.
The effective full year tax rate for 1997 is expected to be 34.0%.
Depreciation/amortization expense for the quarters ended 3/31/97 and
3/31/96 was $57 million and $54 million, respectively.
ARCO CHEMICAL COMPANY
SALES VOLUMES STATISTICS
Three Months Ended March 31
(Unaudited)
1997 1996
Core Products (mm lbs.) (A) 1,002 895
Co-products:
TBA and Derivatives 260 275
(mm gals.)
SM and Derivatives 708 659
(mm lbs.)
(A) Includes PO, PO derivatives, TDI and ADI.
SOURCE ARCO Chemical Company
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CONTACT:
Sallie D. Anderson, Communications,
610-359-5773, or Patricia A. Bartlett, Investor Relations,
610-359-3171, both of ARCO Chemical
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