NEW YORK--(BUSINESS WIRE)--Fitch Ratings has published a special report comparing and contrasting key metrics, trends and outliers for a sample of nine North American high-yield specialty chemicals companies. The report highlights topics such as the effects of the drop in crude prices, differences in operating profiles, M&A trends, and covenant differences. Companies reviewed in the sample include A. Schulman Inc., Axalta Coating Systems Ltd., Hexion Inc., Koppers Holdings Inc., Kraton Performance Polymers, LSB Industries, Inc., Momentive Performance Materials Inc., OMNOVA Solutions, Inc. and Platform Specialty Products Corp.
'Lower crude prices have put downward pressure on margins throughout the production chain,' says Greg Fodell, Associate Director, Corporates. 'However, the impact on margins for North American specialty chemicals has been moderated, both because of an offsetting decline in natural gas liquids prices, and because of pricing power in specialty end markets.'
In the long-run, Fitch expects North American chemical producers to remain cost-advantaged due to robust natural gas and NGL feedstock supplies, though some margin compression is likely. Specialty chemicals should be protected given their high value-add and lower percentage of total end-product cost. Producers should benefit from solid domestic growth in manufacturing and their exposure to continued recovery in U.S. construction and consumption.
Despite historically high valuation multiples, M&A activity has increased in the past few years as low interest rates and robust economic conditions fuel growth strategies. Fitch believes that higher barriers to entry and high importance of customer relationships in the specialty chemicals space drives M&A activity as companies seek to scale and diversify.
The strategic focus of many specialty companies continues around population trends for new product development and specialization, focusing on rapidly growing North American agriculture, electronics, health care and nutrition markets.
The full report, 'High-Yield Specialty Chemical Review' is available at www.fitchratings.com
Additional information is available at 'www.fitchratings.com'.
High-Yield Specialty Chemicals Review (Analyzing Key Metrics, Trends and Outliers)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871614
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