Tags: Albemarle | specialty | chemicals | ALB

Albemarle a Specialty Chemicals Tech Play

By Tim Plaehn   |   Thursday, 29 Dec 2011 02:37 PM

Specialty chemical manufacturer Albemarle (ALB) produces market-focused products. The company's offerings also provide a play in tech industries where one does not usually think about chemicals.

Albemarle produces chemicals in the segments of polymer solutions, catalysts and fine chemicals. The company's products are used in a range of industries, including fire safety, energy, health and nutrition. Approximately 40 percent of revenues are generated in the United States, 20 percent in Western Europe and the remaining 40 percent in the rest of the planet. The focus on specialty products allows Albemarle to earn profit margins of 20 percent to 30 percent on the different product lines.

For the first three quarters of 2011, Albemarle generated revenue of $2.16 billion, up from $1.76 billion a year earlier. Net income for the period was $3.66 per share, up 38 percent from $2.64. For the third quarter, the company reported record net income for a quarter for the third consecutive quarter.

For the full year 2011, the earnings forecast is $4.75 per share, compared to $3.56 in 2010. For 2012, the Wall Street consensus earnings estimate is $4.73.

Goal for growth

Albemarle management has set the goal of doubling company revenues between 2010 and 2015. Two-thirds of the growth will come from organic products and programs and the remaining one-third from acquisitions or mergers.

Growth factors include a lower cost structure in polymer solutions, continued high levels of growth in catalysts and new, custom products out of the fine chemical division.

One product from the catalysts division is organic metals. These are organic crystalline chemicals infused with metal ions. One use of these chemicals is the production of high brightness LED lights for a wide range of tech products. Albemarle has been ramping up production of organic metals in 2011 and into 2012.

Recently, the analysts at Sterne Agee initiated coverage on ALB with a buy rating. The ratings report noted the company is the No. 2 player in a focused market with a high level of profit potential.

The company next reports on Feb. 24.

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Specialty chemical manufacturer Albemarle (ALB) produces market-focused products. The company's offerings also provide a play in tech industries where one does not usually think about chemicals. Albemarle produces chemicals in the segments of polymer solutions, catalysts...
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