Chemistry Industry Association of Canada

December 12, 2008 07:00 ET

Volatility for Chemistry Industry in 2008; More Uncertainty Projected for 2009

OTTAWA, ONTARIO--(Marketwire - Dec. 12, 2008) - Volatility has characterized the Canadian chemistry industry's performance in the last year, according to a year-end business survey of the members of the Canadian Chemical Producers' Association (CCPA).

"High energy and raw material costs and the rapid swing in the value of the Canadian dollar, combined with the crash in demand in the housing and auto sectors were all major contributors to this volatility," said Richard Paton, President of CCPA. "As a key supplier to many other sectors, the global slowdown will hit our sector hard in 2009."

In 2008, total sales of basic chemicals and resins reached $25 billion - a 2% increase from 2007 in current dollars. This was mainly the result of a significant increase in input prices which were passed through during the early part of the year.

Operating profits before interest, taxes and special write-offs for 2008 were $1.6 billion, down 19% from a record in 2007. The extent of the plummet in sales and operating margins during the fourth quarter is highlighted by the fact that until September of 2008 we were on course to see another year of new record profits.

"The last quarter of 2008 brought a perfect storm of falling prices, falling credit and falling demand," stated Dave Podruzny, Vice-President, Business and Economics at CCPA. "This is the most significant economic breakdown in recent memory and the sector will be impacted severely by the financial market meltdown and economic recession which could be one of the longest in decades."

Looking ahead, survey respondents expect sales value to decline by 27% in 2009, with volume forecast to decrease by 13%. In this very gloomy projection, total exports are predicted to decline by 25% and sales to the US are expected to decline by 24%. Operating profit is expected to decrease by 35% to $1 billion in 2009.

These projections, while unprecedented, are supported by recent announcements of temporary plant closures and cutbacks around the world by some of the largest chemical producers.

"CCPA is looking forward to federal and provincial budgets to provide clear support for a competitive manufacturing sector. We will be advocating for business conditions that are necessary for medium-term financial success and for economic recovery." added Richard Paton. "At this difficult time, CCPA will further focus on policy areas that provide net reductions in costs to our business."

For a copy of the complete year-end survey, including our Outlook 2009, visit: www.ccpa.ca/files/Public_Affairs/2008_Year_End_Survey_of_Business_Conditions.pdf.

Contact Information

  • CCPA
    Julien Lavoie
    Public Affairs
    613-237-6215 ext 239
    www.ccpa.ca