Show Magic Returns To Chemicals The phasing out of marginal and obsolete rigorous reducing of trimming in basic and renewed emphasis on immediately marketable products were all basic factors in the recovery affecting the chemical industry in 1971 and SUCH STRESS on practical business coupled with selective price boosts in some strong sectors and price stabilization in weaker reversed the ominous downtrend which had led to widespread disenchantment with the industry as a the chemical makers have been buoyed by a strong demand for both basic and specialty decreased competition from petroleum and an almost zero market entry by FOR THE first time in many demand is outpacing The Research Department of Babson's Reports sees the chemical industry as being in a powerful new aided by a robust U.S. Breaking all records last chemical producers scored gains in and Output of major industrial chemicals and synthetics was up about 14 SALES actually grew more rapidly than the Gross National Most significant of profits were up more than 20 percent-the largest gain in 10 These advances exceeded the long-term average trend for the entire The in 1971 and since accelerated-has convinced the doubters that the making of chemicals has not yet turned into a commodity-type operation with little IN a major feature of the performance in 1972 and into 1973 has been the resurgence of many products which had been showing relatively or growth in the years just Although many chemical stalwarts were still far from bumping up against Phase II ceilings on profit margins in the probability of such a happening in 1973 was BUT PHASE III provides somewhat greater it now seems to the Babson making it easier to prevent price dislocations and achieve reasonable price adjustments-more so than under Phase at In the absence of mandatory producers should be able to hike prices on those products which have been in short companies have the option of making 1971 one of the two base and an average price increase of percent is now permitted without regard to the profit-margin WITH industry shipments slated to advance by 15 percent in operating rates by 86 percent or and capital spending also on the experts foresee profit margins reaching the 1966 record For the majority of stocks of chemical companies we are currently advising a Hold The Babson Staff consider that Culligan Monsanto and Corporation are worthwhile recommendations for new At all three are selling at relatively low price-earnings multiples on the New York Stock CULLIGAN holds a prime position in the water-treatment equipment field and is expected to increase earnings materially for the 1973 fiscal year ending April bolstered by quickening European Monsanto is a well-diversified producer with earnings slated to advance sharply this The company has succeeded in making significant inroads on many which should make for revitalized is a leader in dental and specialized instrument Management's programs to reduce costs and restructure its operations should be translated into higher earnings for the j present i |