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Albemarle Looks To Double Revenue By 2015
Chemical manufacturer Albemarle Corporation (NYSE:ALB) is looking to double the company's sales and earnings by 2015 through a focus on organic growth opportunities and selected acquisitions. The company is also looking to the emerging markets for much of this growth as it continues to diversify away from North America and Europe.
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A Look at Albemarle
Albemarle is a specialty chemical company with three business segments - Polymer Solutions, Fine Chemistry and Catalysts. The company is a major supplier to the refining industry and is also dependent on the sale of flame retardant products.
Albemarle competes with a number of domestic and international companies including Chemtura Corporation (Nasdaq:CHMT) and W. R. Grace & Co. (NYSE:GRA).
Goals for Albemarle
Albemarle reported sales of $2.36 billion in 2010 and has set a goal of growing those revenues to between $4.8 billion and $5.6 billion by 2015. This range implies a compound annual growth rate (CAGR) of 15-18% for the company.
Albemarle reported diluted earnings per share of $3.51 in 2010 and will grow earnings at a faster rate than revenues through 2015. The company estimates that earnings will range between $8.40 and $9.75 per share by that year. This range implies a CAGR of 19-22% for Albemarle.
Albemarle will also continue to diversify away from slower growing markets in North America and Europe. The company reported 39% of its sales from outside of these two regions in 2010 and estimates that this share will reach 49% by 2015.
Asia will be a prime focus for the company as it looks to grow revenues here from $263 million in 2010 to $800 million in 2015. The company also plans to push sales into the Middle East and India and hopes to grow revenues in this region from $172 million in 2010 to an estimated $350 million by 2015.
Albemarle M&A
Albemarle also plans selective acquisitions to meet its 2015 revenue and earnings goals. It is currently on the hunt for companies with quality earnings and cash flows, which are involved in similar or adjacent product lines.
Financials
Albemarle emerged from the recession in a sound financial condition and reported cash and cash equivalents of $441 million, compared to total debt of $768 million March 31, 2011. The company doesn't have any major debt maturing until 2013. The company also pledges to maintain the investment grade ratings on its debt. (Find out about the impact debt can have on a company's bottom line in Will Corporate Debt Drag Your Stock Down?)
Pricing Power
One tailwind that will help Albemarle achieve its goals through 2015 is that the company has pricing power in many of its business lines. Albemarle recently raised prices for a number of products including flame retardants, bromine and hydrobromic acid.
Other chemical companies have pricing power as well. Kronos Worldwide (NYSE:KRO) recently instituted a price increase for the company's titanium dioxide products.
The Bottom Line
Albemarle is focusing on emerging economies in Asia and the Middle East as the company moves to achieve its ambitious goals of doubling revenue by 2015. The company hopes to achieve this through organic growth and selected acquisitions.
TUTORIAL: How To Trade With Margin
A Look at Albemarle
Albemarle is a specialty chemical company with three business segments - Polymer Solutions, Fine Chemistry and Catalysts. The company is a major supplier to the refining industry and is also dependent on the sale of flame retardant products.
Albemarle competes with a number of domestic and international companies including Chemtura Corporation (Nasdaq:CHMT) and W. R. Grace & Co. (NYSE:GRA).
Goals for Albemarle
Albemarle reported sales of $2.36 billion in 2010 and has set a goal of growing those revenues to between $4.8 billion and $5.6 billion by 2015. This range implies a compound annual growth rate (CAGR) of 15-18% for the company.
Albemarle reported diluted earnings per share of $3.51 in 2010 and will grow earnings at a faster rate than revenues through 2015. The company estimates that earnings will range between $8.40 and $9.75 per share by that year. This range implies a CAGR of 19-22% for Albemarle.
Asia will be a prime focus for the company as it looks to grow revenues here from $263 million in 2010 to $800 million in 2015. The company also plans to push sales into the Middle East and India and hopes to grow revenues in this region from $172 million in 2010 to an estimated $350 million by 2015.
Albemarle M&A
Albemarle also plans selective acquisitions to meet its 2015 revenue and earnings goals. It is currently on the hunt for companies with quality earnings and cash flows, which are involved in similar or adjacent product lines.
Financials
Albemarle emerged from the recession in a sound financial condition and reported cash and cash equivalents of $441 million, compared to total debt of $768 million March 31, 2011. The company doesn't have any major debt maturing until 2013. The company also pledges to maintain the investment grade ratings on its debt. (Find out about the impact debt can have on a company's bottom line in Will Corporate Debt Drag Your Stock Down?)
Pricing Power
One tailwind that will help Albemarle achieve its goals through 2015 is that the company has pricing power in many of its business lines. Albemarle recently raised prices for a number of products including flame retardants, bromine and hydrobromic acid.
Other chemical companies have pricing power as well. Kronos Worldwide (NYSE:KRO) recently instituted a price increase for the company's titanium dioxide products.
The Bottom Line
Albemarle is focusing on emerging economies in Asia and the Middle East as the company moves to achieve its ambitious goals of doubling revenue by 2015. The company hopes to achieve this through organic growth and selected acquisitions.
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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