Goldman Cuts Profit Estimates for Chemical Makers on Oil

Goldman Sachs Group Inc. cut earnings estimates at seven U.S. chemical makers to reflect a stronger dollar and product prices that are falling with crude oil.

Goldman lowered 2015 profit estimates 20 percent at Dow Chemical Co. and LyondellBasell Industries NV, 19 percent at Westlake Chemical Corp. and 6 percent at Eastman Chemical Co., analysts led by Robert Koort said in a note yesterday. The changes reflect the impact of falling oil prices on ethylene and related plastics. Estimates for 2016 were also reduced.

“Despite this cut, we still see downside risk to our 2015 EPS estimates if we use the current spot Brent oil price or our commodities team’s new $50 per barrel Brent oil forecast for 2015,” Koort said in the note.

Goldman has cut profit estimates for Dow Chemical, the largest U.S. chemical maker, seven times since oil peaked in June. The slide in oil prices and a rising dollar against the euro and other currencies will lead other industry analysts to revise estimates, Goldman said.

The analysts also cut 2015 estimates for intermediate chemical makers Celanese Corp., Huntsman Corp. and Trinseo SA as the benefit of lower ethylene is eventually passed through to consumers via lower prices, Goldman said. The exceptions are paint makers which should be able to maintain prices and benefit from lower costs.

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