Document 7MBLepvVwn4JKOkDmyaEkrv56
PRODUCT PROFITABILITY
ILMoInsUanto
APRIL 1964
COPY KO.___I 0633402
WATER PCB-00039694
PRODUCT PROFITABILITY
Contents
GENERAL COMMENTS ........................................................................................................
AGRICULTURAL DIVISION ....................
Pace
Ammonium Nitrate ..........................
S Randox Liquid.................. 6
MM A................................. ..
7
Nitric Acid - Concentrated .,
S 2, 4-D Acid ........................ 9 2.4.5-T Acid.........................
10
Randox Granular ............................ ii
rHEMSTRAND DTVtfildM....................... .
Acrilan - Carpet......................... Acrilan - Continuous Filament Acrilan - Solution Dyed .........
18a 19 Nylon Industrial ........... 20 Nylon - Textile .................. 21 Nylon - Textured ............... 22
GERING .....................................................
HYDROCARBONS DIVISION.............................
Acrylonitrile .................
28
Butadiene ......................................... 29
Ethylene & Co-Product* ............ 30
Production & Exploration .... 31
Refinery ........................................... 32
Station Marketing .................... Styrene Monomer ......................... Vinyl Acetate Monomer........... Vinyl Chloride Monomer .......... All Other MonomerB..................
INORGANIC DIVISION......... ........................
ACL's .................................................. 39
Alkylate* ...............
40
All - Condensed & Fluffy .... 41
Caustic Potash............................. 42
chloroeulfonic Acid.................. 43
Copper Project .............................. 44
DCP Anhydrous & Dihydrate ... 45
Electronic Chemicals ............... 46
Phosphoric Acid - Food............ 47
phosphoric Acid - Other ......... 48
potassium Phosphates ................ 49
.................... ^..................................... MCP - All Grades....................... Santocels ...................................... SMP.................... Sterox-Phenol Base .................. STP - All Orades ...................... Sulfuric Acid............................. Syton - Mertone ......................... TSP Crystal .................................. TSPP .............................................. Vanadium Catalyst ....................
PAGE 1- 3
27-37 33 34 35 36 37
38-59 50 51 52 53 54 55 56 57 58 59
0633403
WATER PCB-00039695
PRDDPCT PROFITABILITY
Sffnfjifai
pAoq
ORGANIC DIVISION ....................................
Page
Adipic Acid ..............................
61
Aluminum Sulfate...................
62
Aroclors A Therminols ....
63
Aspirin , ...........................
64
Biphenyl .....................................
65
Bisphenol A ..............................
66
Caffeine .....................................
67
Di Octyl E'hthalate ..............
66
Ethavan .......................................
69
Fumaric Acid...........................
70
H Acid.........................................
71
Maleic Anhydride ...................
72
Mersize AM. TFL A
RoBin Sine KIP.....................
73
Orthonitroaniline .................
74
Para-Nltroaniline............
75
Para-Phenetidins (Inch Tech.) 76
Pentachloropheno1 .................
77
Phenacetin................................
78
Phenol .........................................
79
Phenolaulfonic Acid6534 ,.
80
Phthalic Anhydride ..............
81
Pydraul A-200 ..........................
82
60-103
Pyranol* ............................................... Saccharin............................... Santiclzer 141 ................................. Santiclzer 160 ......................... Santiclzer 409 ......................... Santooure A Cyclex ........
Santocure NS A Cyclex B ... Santoflex AW A Ajone E .... Santoflex DD A Ajone DD ... Santoflex 36............... Santoluhe 203 B A C {Incl.
Santolene F A FC) ........ Santoluhe 393 .......... Santoluhe 801............. Santophen 1.................. .............
santopoid 23 RI A 23 RIA .. Santowhite Crystals A
Santonox (Incl.Santonox R) Skydrol ...................................... Skydrol 500-A
Thiofide .............................................. 3.4,4-Trichlorocarhanilide.
Vanillin ..............................................
83 84
85 66 87 88 89 90 91 92
93 94 95 96 97
98 99 100
101 102
103
PACKAGING DIVISION
123
PLASTICS DIVISION ...................................
Aminoplasts............ .................. 105
Formalin.................................... 106
HI Density P.E....................
107
Latices ....................................... ' 108
Low Density P.E....................... 109
Lustran ....................................... 110
Lustrex MM................................ Ill
Opalon ........................................... Phenoplasts ................................ Polyslectrolytes ....................
Proteins.................. Saflex........................................... Ultron Film ................................
104-117 112 113 114
115 116 Il7
SHAWINIGAN RESINS ..................... Butvar Product Group .......... Formvar Product Group ....
119 Gelva Emulsion ......................... 120 Gelvatol Product Group ....
116-122 121
122
0633404
WATER PCB-00039696
PRODUCT PROFITABILITY
This report has bean prepared to serve as a basic reference for volume, price, costs, profitability and potential of Monsanto's principal products. Such products are listed alphabetically by division, broken down between sales (external) and Internal Use. The products covered herein account for 65% of the total domestic investment. The report will be issued annually or otherwise updated for major product additions, etc. This information is extremely confidential and Bpecial safeguards are recommended to maintain security. ftll return figures are calculated on the investment, volume, and profit on product sales made to outside customers. Quantitiss of product indicated for "internal Use" are transferred as intermediate materials to end products. Investmsnt and cost of intermediates are rolled forward to the end product and included in the profitability of the eale of end producte to customers. Sales are for the domestic divisions only, but include their export sales. Product profitability is based on "Division Contribution" (operating profit befora any Central Office allocations) after apply ing the applicable pro-forma tax rate.' Results are shown for 1961-62-63 plus Budget 1964, and on a hypothetical basis of maximum output based on 1964 capacity. Such maximum is shown only as an approximation of current potentiel, with no attempt made to reflect any such results on intermediate product coats.
-10633405
WATER PCB-00039697
As a yardstick for viewing product profitability, return on gross investment of the Company and each division is as follows]
Based on Net income Consolidated Parent Company (b)
Based on Divisional Contr. Parent Company (b)
it Return on Investment Actual_______ Budget
1961 ,j962 1963 12&44
4.9 4.7 4.6 5.1 4.8 4.6
6.2 5.9 5.8
4.9 4.8
7.1
Agricultural Chematrand Hydrocarbons
Inorganic Organic Plastics Cihawinigan caring Packaging
6.3 10.0
3.4 6.4 6.9 2.7
-
-
-
6.3 10,4
1.9 6.1 6.9 2.6
2.4 -
7.1 9.4 2.7 6.8 5.9 1.7 6.1 3.0
(.2)
7.4 10.8
3.6 7.3 7.9 2.6 6.8 3.7 1.3
(a) Depreciation at straight-line. Previous years at SYD. Change in crease* 1964 Return by approximately 1/2 of lit point.
(b) Including Domestic and Panamanian Subsidiaries.
On page 3 there is a compilation of division returns grouped to show the amount of investment in products having a rate of return Which is (a) a loss, (b) low, 0-3%, (c) low to company average, 3-5.8%, and (d) above company average. The company average at 5.6%
is that of the parent Company based on divisional contribution in 1963.
-20633406
RETURN OH INVESTMENT Year 1963
Agricultural Dlvlelon % Return att Loss 0 to 3% 3 to 5.ex
Over 5.8% Total
% of Total Inveat.
1.7 23.8
3.8 70.7 100.0
inMM'a Div.
Contri
Jtooa.fct.r. bution*
$ 2.4 34.3 5.4
101.9 $ 144.0
8 (.1)
.6
,,.2
JU1 $ 10.2
% Ret. on
Inveat.
1.6 3.A 9.3 7.1
% Return att Loss 0 to 3% 3 to 5.8% Over 5.8%
Total Hydrocarbons Division
% Return att Lobb 0 to 3% 3 to S.8% Over 5.8%
Total
.7 12,6 66.7 100.0
26.8 12.3 44.9 lir.g 100.0
3.4 -
61.7 .. .4.24,6. 8 489.7
8 67.3 31.0
112,9 40.3
8 251.5
$ (.4)
-
2.5 43.8 8 45.9
$ (2.6) .8
4.1 _JL1 8 6.6
4.1 10.3 9.4
2.6 3.6 10.6 2.7
% Return att Loss 0 to 3% 3 to 5.8% Over 5.8%
Total
3.5 -
18.2 78.3 100.0
8 6.5 -
34.1 146.4 8 187.0
8 a.i>
1.3
JLLti 8 12.7
-
-
3.8 8.6 6.8
% Return att Loss 0 to 3% 3 to 5.8%
Over 5.8% Total
12.8 11.0 42.8
100.0
8 32.6 28.0
109.0
84,9 8 254.5
5 (1.7) .2
4.2
12.i $ 1S.0
.8 3.9 14.4 5.9
% Return att Loss 0 to 3%
3 to 5.8% Over 5.8% Total Combined fiivie:Lone** % Return att Lobb 0 to 3% 3 to 5.8% Over 5.8% Total
42.4 7.5
33.9 16.2 100.0
16.1 8.5
24.0 51.4 100.0
8 95.0 16.8 75.9
- 36.4 $ 224.1
8 266.8 140.5 399.0
..853,7
8 (3.6) .2
2.8
_JL4 8 3.8
8(10.2) 2.5
15.1 88.8 96,2
1.1 3.7 12.0 1.7
1.8 3.8 10.4 5.8
* After Taxes at 52% a* Including Building Products, Gering, Packaging and Shawinigan
0633407
-3-
WATER PCB-00039699
AGftrCtTL-1 ORAL DIVISION
Division profitability has been (SMM'sj
% Return on. Investment AT Gross Investment Sales Division Contribution BT Div. Cont. as % of sales $ Sales/$ Investment
1961
6.3 119.4
66.1 15.5 22.6
.57
Actual 1962
6.3 136.2
73.7 18.0 24.4
.54
-A2&1
7.1 144.0
81.7 21.3 26.0
.57
1964 Budget
7.4 160.0
92.3 23.6 25.8
.58
In 1963 investment in the divisions' products earned the following rates of returni
Loss 0 to 314 J to 5.014 Over 5.615
% of Total Investment
1.7
23.6 3.6
70.7
Major products reported aret
Ammonium nitrate Anhydrous Ammonia MHA Nitric Acid-Concentrated Nitrogen Solutions Parathions Randox Granular Randox Liquid Rogue Santoquin Liquid 2,4-D Acid 2,4,5-T Acid Drea Prills
gage
5 6 7 6 '9 10 11 12 13 14 15 16 17
These comprise 80% of the divisions' investment in 1963.
0633408
WATER PCB-00039700
MMPMVM JULTMTE ($ In Million*}
Oross Invest. - Sale* Internal Use Total
Actual 1961 12" 1963
$38.9 $ .4 $39.3
36.8 1.2
38.0
35.6 2.1
37.7
1964 Budget Capjja
40.7 2.7
43.4
42.1 2.1
44.2
For Sales i % BOX (after tax)
S.l 6.1 6.4
5.9 8.0
Sales Oross Profit SARE Other Income Division Contribution
$ie.3 $ 5.6 $ 1.5
$$ 4.1
17.9 5.9 1.2 -
4.7
17.6 6.0 1.3
-
4.7
17.6 6.2 1.4
-
4.8
21.6 8.4 1.7
-
6.7
As % of Sale*! Division contribution Oross Profit SARE
$ Sales/$ Investment
22.4 30.7
8.4 .47
26.1
33.0 7.0 .49
27.0 33.9
7.4 .49
27.2 35.4
8.2 .43
31.1 38.7
7.6 .51
Selling priceAon Cost of SaleeAon
$ 58 57 55 $ 40 38 36
53 53 35 33
Capacity - M Tons Excess Internal Use Sales
S43 489 468 222 162 132
3 10 17 318 317 319
427 427 76 -
22 22
329 405
Sales volume of thi* product ha* remained constant at capacity through the last few years with a alight increase forecast for 1964. The excess capacity shown represent* the imbalance between prilling capability and available ammonia and nitric acid. The decrease shown in the excess capacity reflects the utilization of these prilling facilities to produce Natrium, Return on investment has increased from 5.1% in 1961 to 6,4% in 1963. Thi* ha* been accomplished through cost reductions which more than offset lower selling prices. Although the return on investment is still not satisfactory, the high capital already invested in nitrogen end products, and particularly in ammonium nitrate, must be utilized as fully as possible to maximize the total profits generated by the nitrogen complex. A unit of ammonia sold as ammonium nitrate generates more gross profit and cash flow than the sale of the unit of ammonia as such but the high investment in these end-product facilities does not yield high return.
The MAC agricultural system now being developed to sell at the retail level is expected to provide overall improvement in the return.
-5- 0633409
anhydrous ammonia
($ in Millions)
Actual________ 1961 1962 1963
1964 Budget Cap'tv
Gross Invest. - Sales Internal Use Total
$21.2 $24.4 $45.6
30.4 23.2 53.6
18.2
37.8 56.0
18.1
43,9 62.0
19.7 42.6 62.3
For salesi X ROI (after tax)
Sales Grose Profit SAKS Other Income Division Contribution
As X of Salest Division Contribution Gross Profit SAME
$ Sales/$ Investment
Selling Price/Ton CoBt of- Sales/Ton
a.5
$11.2 $ 5.4 $ .9 $$ 4.5
7.5
13.0 5.6 .9 4.7
10.4
10.7 4.6 .8 .1 3.9
40.2 48.6
6.5 .53
$ 69 $ 36
36.1 . 42.8
7.0 .43
36.8 43.8
7.4 .59
66 68 37 38
9.5 10.6
9.9 11.2 4.3 5.1
.6 .9 -3.5 4.2
34.8 42.9
8.2 .55
71 41
37.5 45.3
7.9 .57
71 39
Capacity - M Tons Excess Internal use Sales
454 S03 588
--
4
292 304 427
162 199 157
600 600 17
443 443 140 157
Return on investment has grown from 6. 5X in 1961 to 9.5X in 1964. The actual improvement ie greater than IX because 1961 included high profit sales to Chemstrand. If the 1964 transfer of 75M tons were to be shown as sales, 1964 return would be about 11X. Ammonia has historically been a profitable product and this.trend ie expected to continue since the principal growth of ammonia Bales is projected for fertilization by direct application to the soil.
Selling prices of ammonia have stabilized and the projected balanced supply and demand situation will tend to maintain that etability. The increase in average Belling prices reflects the shift of ammonia from industrial users to the direct application markets.
Major additions to capacity, including the Muscatine plant, have been accomplished to increase 1961 capacity by one-third.
0633410
-6-
MHA ($ in Hillions)
Gross Invest. - Sales Internal Use Total
Actual 1961 1262 1963
9 1.7 1.8 2.9 *- - * 1.7 1.8 2.9
1964 gR.'ta
3.0 3.3
.
3.0 3.3
For Salest X KOI (after tax)
Sales Gross Profit SAKE Other Income Division Contribution
18.4
9 2.0 0 1.0 t .3 9f .7
22.2
2.6 1.2
.4
-
.8
11.8
2.4 1.1
.3
-
.8
15.5
2.7 1.2
.4
-
.6
23.1
4.4 2.0
.4
1.6
As X of Salest Division Contribution
Gross Profit SARE $ 8ales/$ Investment
32.2 47.4 15.3 1.19
31.0 47.0 16,0 1.49
30.3 44.1 13.B
.83
31.3 44.7 13.3
.92
34.9 45.1 10.2
1.33
Selling Prlce/lb Cost of Sales/lb
61.05 1.02
9 .55
.54
.97 .54
.91 .91 .50 .50
Capacity - MM lbs Excess Internal Use Sales
2.4 3.0 4.8 .5 .4 2.3
*- -
1.9 2.6 2.5
4.8 4.8 1.8 -
--
3.0 4.8
Return on investment ie IS.5# in 1964, down from 18.4X in 1961. This ie the reeult of significant price reductions following reductions in the Chief competitive product (D L Methionine). In addition, there has been strong price pressure by competitive manufacturers in Europe who have been importing' into domestic markets.
Cost reductions have bean able to offset only a portion of this pries decline but expended volume is expected in the future to bring a gratifying increase in return. In spite of the somewhat depressed state of the poultry industry, increased product technology and knowledge of application should result in these expected volume increases being realised.
063341L
CONCENTRATED NITRIC ACID
(f in Millions)
Actual______________
1964
mi1961 1962
Budget Cap'tv
3ross Invest, - Bales
9 1.0 2.3 3.4
Internal use $ 1.4 1.6 1.5
Total
$ 2.4 3.9 4.9
4.3 4.9 1.1 .7 5.4 5.6
Tor Salesi % ROI {after tax)
(2.0) 5.5
5.9
6.0 9.8
Sales Gross Profit BARE Other Income Division Contribution
As % of Salesi Division Contribution Gross Profit BARE
$ Sales/$ investment
Selling Price/ron Cost of Sales/ton
$ .5
9$ .1
6?< .1)
2.0 .4 .1
-
.3
1.8 .5 .1
-
.4
(7.8) .9
8.5 .52
9 59
$ 59
13.1 20.1
7.0 .87
67 54
23.6 31.0
7.4 .52
65 45
1.8 2.7 .7 1.2 .2 .2
-.
.5 1.0
29.1 37,4
0.2 .41
55 35
36.2 43.3
7.1 .54
55 31
Capacity - M Tons Excess Internal Use Sales
11 47 (7) 12 12 15 6 20
45 2
16 27
58 58
16 .
10 10 32 48
Small quantities of concentrated nitric acid are sold to customers and it is also used to strengthen regular nitric acid for sale as 42 Be. acid. The larger portion of sales is to Mobay under existing long term contracts. Internal use is in the Organic Division for manufacture of nitrated organic compounds. Both outlets are expected to grow at satisfactory rates.
Even though selling prices have declined from $59/ton in 1961 to a forecasted $55/ton in 1964, return on investment hae improved to 6.0%. This has been the effect of lower cost of our new regular and ,concentrated nitric acid plants installed over the last few years. Because of the high ratio of fixed to total cost'in these plants the increased volume has lowered unit costs substantially and the future growth in volume will further reduce these to provide a return on 'investment of` about 10%.
0639412
-B-
NITROGEN SOLUTIONS ($ In Million*)
Gross Invest. - Sales internal use Total
For Salesi # ROX (after tax)
Sales Gross Profit BARB Other Income Division Contribution
As % of Salesi Division contribution Gross Profit BARS
$ Sales/S Investment
Selling price/Ton Cost of Sales/Ton
Capacity - M Tons Excess Internal Due Sales
Actual 1961 12S1 1963
614.1
$$14.1
15.6
*
15.6
13.2 13.2
6.1 5.2 6.2
$ 1.1 6.1 6.7 $ 2.4 2.1 2.4 $ .6 .4 .4 $> $ 1.8 1.7 2.0
23.2 33.6
8.3 .50
$ 52 $ 35
320 184
-
136
27.8 34.4
7.0 .39
51 34
320 202
-
118
29.5 36.6
7.4 .44
48 30
290 150
140
------ 1964 u4asl cap'tv
16.8
-
16.8
31.9
-
31.9
5.7 7.1
6.6 13.9 2.5 3.4
.6 .9
*.
1.9 4.5
29.0 37.2
8.2 .39
48 30
290 152
-
138
32.6 39.1
6.5 .44
48 29
290
290
Return on investment has remained relatively stable at about 6*. 1964 return is projected at slightly lower because of higher investment diverged per ton of ammonia contained. Selling prices have declined in the period covered {from $52/ton to $48/ton) but this has been more then offset by the lower cost which has the effect of slightly increasing the per ton margin.
-90633413
WATER PCB-00039705
PARATHIONS ($ in Millions)
Gross invest. - sales Internal Use Total
Actual_______ 1961 1962 iaii
$12.9
$$12.9
14.4
-
14.4
16.1
-
16.1
1964' Budget Can'tv
18.2 .1
18.3
18.3 .1
18.4
For Salesi % KOI (after tax)
9.8 11.1 15.7
13.6 13.8
Salas Gross Profit SARIS Other Income Division Contribution
? 9.7 $ 4.0 $ 1.5
$ .1 $ 2.6
9.9 13.3 4.9 7.0 1.6 1.9
- .1
3.3 5.2
13.4 6.8 1,8
-
5.0
13.6 6.9 1.8
,,
5.1
As % of Salesi Division Contribution Gross Profit SAKE
$ Sales/6 Investment
Selling Price/lb Cost of Sales/lb
-
27.3 41.7 15.3
.75
$ .62 $ .36
33.6 49.4 16.0
.69
.65 .33
39.3 52.6 13.8
.83
.67 .32
37.2 SO.4 13.3
>79
.64 .32
37.3 50.4 13.2
.75
.64 .32
Capacity -MMlbs Excess internal use
Sales
18.0 20.'4 2.3 ' 5.1
--
15.7 15.3
19.5 (.5) -
20.0
21.4 .3 .3
20.8
21,4
-
.3 21.1
Return on investment is improving at an excellent rate from under 10% in 1961 to 13.67& forecast for 1964. Sven 1964 is conservatively stated since 1964 capital includes the $3.0MM expansion to 36.0MM/lbs. per year, the benefits of Which will not be realised until 1965.
Yield and other manufacturing cost improvements over the last few years have brought significant decreases in unit costs. The trend of parathion sales prices has been upward for the last five years, how ever, price reductions are expected in the domestic market in the future as tariffs are reduced or completely eliminated.
Dynamic growth in demand for these insecticides is expected over the next three to five years. Major insect peats ere becoming resistant to chlorinated hydrocarbon insecticides which will open significant insecticide markets to parathion.
0633414
-10-
RANDOX ORANIIIAR (9 In Million*)
Gross Invast, - Sale* Internal Dsa Total
For Sale*i X BOX (after tax)
Sale* Ore*a Profit BARE Other Income Division Contribution
Aa X of Galas t Division Contribution Orosa Profit SARE
$ Sale*/? Investment
Selling Price/lb Cost of Sales/lb
Capacity - MM lb* Excess Internal Die Salas
Actual________ 1961 im mi
$ 1.9
9$ 1.9
2.2 .3.4
--
2.2 3.4
2.7 4,9 a.6
9 1.0 1.4 2.3 $ .3 .4 .9 S .2 .2 .3 9 - - a. 9 .1 .2 .6
11.2 26.6 15.3
.51
9 .30 9 .22
12.4 9.2
-
3.2
15.9 31.9 16.0
.64
.30 .20
12.4 7.7 e. 4.7
26.8 40.6 13.8
.67
.32 .19
12.4 5.2
-
7.2
1964 Bffi&sfc. csp'tv
3.7 3.8
--
3.7 3.8
11.9
3.2 1.3
.4
.9
15.1
4.0 1.6
.5
1.1
27.7 41.0 13.3
.86
.32 .19
12.4 2.6
-
9.8
29.0 40.6 11.6 1.04
.32 .19
12.4
12.4
Th* raturn on investmsnt haa riaan from marginal to axoallant <3.796 in 1961 to 11.9X foraoaat for 1964). Continued aalaa growth i* expected at a rata of about 20X par year through 1968. This growth i* expected baoauaa of tha good reputation Randox ha* davalopad for conaiatant, affective weed control and crop safety. In addition, tha market for pra-emarganoa herbicide* ha* now matured and farmer* readily accept tha concept of controlling weed* before they emerge. Haw uses, auch aa weed control in auger can* with Rndox/2,4-D mixture*, are being davalopad which will add materially to future aalea.
A new CDAA plant i* being eonatructed at Muacatine replacing tha Interim facllitiea at the Queany plant. Thit new inatallatlon will offer improvement* in manufacturing coata and a location value of being naar tha market canter.
-11-
0633415
RANDOX LIQUID (9 in Millions)
Actual 196j 1962 1963
1964 Budaet
Gross Invest. - Sales Internal. Use Total
9 .8 99 .8
.9 1.0 . '_
.9 1.0
1.1 1.2 _'
1.1 1.2
For Sales i # ROI (after tax)
1.3 7.3 7.6
7.5 14.7
Sales Gross Profit
SARE Other Income Division Contribution
9 .5 .8 .8
9 .1 .3 .3
9 .1 .1 .1
9- - -
$-
.2 .2
.7 1.3 .3 .5 .1 .1 .
.2 .4
As % of Sales: Division Contribution Gross Profit SARE
% Sales/? Investment
4.1 19.3
IS.3 .64
17.2 33.3 16.0
.88
19.3 33.1
13.8 .61
22.5 35.8 13.3
.67
26.4 35. B
9.4 1.11
Selling Price/Gal Cost of Sales/Gal
95.34 3.5? 5.82
3.86 3.86
94.30 3.71 3.89 1 3.76' 3.76
Capacity - MM Gals Excess Internal Use Sales
.2 .1 -
.1
.2 .1 -
.1
.2 ,1
.1
.2 .2 .1 -
.1 .2
This formulated herbicide has shovm excellent growth with return on investment increasing from l.J* in 1961 to 7.5% in 1964. Sales of the liquid material are.expected to grow but at a rate somewhat lower than that of the Randox granule.
Sales prices have increased from an average of '$5.34/gallon in 1961
to a forecasted average of 55/86/gallon in 1964. These prides are
generally based on the economic value to the farmer rather than
supply-demand factors and Randox can economically justify these
higher price levels.
1
0633416
-12-
WATER PCB-00039708
(9 in Million*)
Gross Invest. - Sales
Internal Use Total
Actual 196j 1962 1963
9*
9 9-
1.2 3.7 - '-
1.2 3.7
1964 Budget Cap'tv
3.9 4.1 _
3.9 4.1
For Salest % ROI (after tax)
Sales Oroas Profit BARE Other Income bivision Contribution
-
9999 * 9"
9.6 19.9
.6 2.1 .3 1.4 .1 .3 .2 1.1
23.6
2.9 2.1
.4 _ 1.7
28.5
3.9 2.8
.4 .. 2.4
AS X of Sales i Division Contribution Oros* Profit SARB
$ Sales/9 Investment
- 44.6 53.7 - 60.7 67.5 - 16.0 13.e
" .45 .56
57.8 71.1 13.3
.74
60.0 71.1 11.1
.95
Selling Pirice/Oal Cost of Snles/Qal
Capacity - MM Sals Excess Internal Use Sale*
9 9*
. -
10.77 10. SO 4.23 3.51
.3 .4 .2 .2 -.1 .2
10.38 10.38 3.00 3.00
.4 .4 .1 .. .3 .4
Thi* product ha* mad* *p*atacular contribution to division profit* and i* forecast a* producing a 23.6% raturn on lnv**tai*nt in 1964. It ha* achiv*d widspr*ad acceptance by ric* grower* for postmergence treatment of barnyard graa* and certain broadleaf weed*, and he* very little competition in thi* area.
The outlook for thi* product la favorable aince it ia improbable that Rogue would become obsolete due to superior performance of a newly
developed product. The possibility exist* that a cheaper product might be introducedr however. Rogue could still be profitable at a lower price due to Monsanto's basic position in the manufacture of 3-4-dichloroanilina.
-13-
0633U7
SASTOQUIH LIQUID ($ in Millions)
Gross Invent. - Sales Internal Use
Total
For Salas> % ROI (after tax)
Sales Gross Profit SAKE
Other Income Sivision Contribution
As % of Sales Division Contribution Gross Profit SAKE
$ Sales/6 Investment
Selling Price/1)> Cost of Sales/lb
Capacity - MM lbs Excess
' Internal Use Sales
.
Actual Ml 1462 1963
6 1.2 1.7 2.4 $ .3 .7 .8 $ 1.5 2.4 3.2 `
10.3
6 1.0 $ .4 ? .1 6? .3
16.7
1.5 .8 .2 .6
17.8
1.9 1.1
.2
-
.9
27.0 42.4 15.4
.80
$1.10 $ .63
5.4 4.0
.5 .9
37,8 53.8 16.0
.92
1.08 .50
5.0 2.8
.8 1.4
47.3 60.1 13.8
.78
1.04 .42
5.0 2.3
.9 l.B
1964 Budget Can'tv
2.6 3.5 .7 .2
3.3 3:7
22.4
2.4 l.S
.3
a.
. 1*2
34.7
4.6 2.9
.4
2.5
48.3 61.7 13.3
.93
1.04 .40
5.4 2.2
.9 2.'3
52.2 61.5
9.3 1.33
1.04 .40
5.4
-
.9 4.5
Return on investment hae Increased since 1961 to 17.8% in 1963 and
22.4% forecast for 1964. Increased volume and substantially reduced
costs have more than offset selling price reductions to achieve these
results.
'.
The reduction in costs reflect lower costs of Santoflex AH, production
efficiencies and the introduction of bulk product handling. Volume
increases have been achieved by creating a profitable climate (by price
reductions) for distributors. This program, has enabled Monsanto to
utilise the services of nationally recognized pre-mix companies in
reaching the desired, markets.
Product acceptance has been good and the outlook for the future is extremely favorable as research, claims that Santoquin is a superior feed antioxidant are documented by experience.
6633416
-14-
2. 4-D ACID ($ in Millions)
Gross Invest. - Gales Internal Use Total
For Salesi * RDI (after tax)
.... Actual 1961 1962 1963
9 5.4 5.2 5.3 $ 2.2 2.3 2.1 7.6 7.5 7.4
1.3 1.4 2.0
1964 Budget Cap'ty
5.6 5.9 1.9 1.7 7.5 7.6
4.8 5.4
Gales Gross Profit GARB Other Income Division Contribution
Ae % of salesi Division Contribution Oross Profit BARI ,
6 Bales/9 Investment
9 2.9 2.6 2.8 9 .6 .6 .6 9 .4 .4 .4 $- - -
9 .2 .2 .2
5.2 20.6 15.4
.53
5.9 21.9 16.0
.51
7.9 21.7 13.8
.53
3.0 3.4 ,9 1.1 .4 .4
.-
.5 .7
18.3 31.6 13.3
.53
18.6 30.8 12.1
.58
Belling price/lb Coat of Sales/lb
9 .29 .28 .28 9 .23 .22 .22
.26 .26 .18 .18
Capacity - MM lbe excess Internal Use Sales
21.6 6.4 5.3 9.9
19.2 4.7 5.0 9.5
19.2 2.4 6.9 9.9
19.2
1.8 5.9 11.5
19.2
-
5.9 13,3
The 4.BX return on Investment projected for 1964 represent* e sharp increase from the 1-2* levels of earlier year*. This increase will come from lower cost* resulting from the reduced cost of Dichlorophenol and its intermediates. A projected increase in sales volume will also contribute.
Belling price* have remained relatively firm though some attrition is recognised in the 1964 projection. The history of the growth in the commodity sale of this product is not spectacular but it is steady. The development of specialty weed herbicides is a factor which would tend to preclude rapid growth. The future should show a greater share of 2,4-D acid capacity being diverted to formulation* with a resulting increase in overall profits.
IS 0633419
2.4.S-T ACID ($ in Millions)
Actual________ 1961 1962 1963
1964 fidget fiap^ty
Gross Invest. - sales
9 1.7 2.0 2.4
Internal Use 9 .4 .9 .4
Total
$ 2.1 2.9 2.8
1.8 2,1 1.0 .8 2.8 2,9
For Salesi % KOI (after tax)
3.1 4.2 (2.3)
9.3 11.6
Sales
Gross Profit
SAKS
Other Income
Division Contribution
As 96 of ssles i Division Contribution Groes profit SAAB
$ Seles/$ Investment
$ 1.5 1.7 1.7
1.5 2.0
9 .3 .4 .1
.5 .7
9 .2 .2 .2 9- - -
.2 .2 - .
9 .1
.2 (.1) ' .3
.5
7.6 23.0 15.4 ' .85
. 10.3 26.3 16.0 .85
(7.0) 6.8 13.8 .70
, 22.6 35.9 13.3 .82
24.4 35.7 11.3
.93
Selling Price/lb cost of 8ales/lb
9 .93 .91 .84 9 .72 .67 .79
.84 .84 .54 .54
Capacity - MM lbs Excess
Internal use Sales
-
2.2 2.2 2.8
.1 (.6) .3
.5 1.0
.6
1.6 1.8 1.9
4.0 4.0 .6 *
1.6 1.6 1.8 2.4
Return on investment is projected at 9.3% for 1964, up from 3,.1% in 1961 and from the 2.396 loss in 1963. This increase will result as the lower costs expected of the new plant installed in 1963 are realised. This substantial cost reduction will more than offset the
sharp selling price reduction felt in 1963 (from 91 to 84 0/lb.).
The 1963 loss was the result of the aforementioned decrease in selling
prices coupled with the cost of an extremely difficult and expensive
start-up of the new plant.
'
ThiB is an established growing herbicide for control of brush and
woody plants. It has an excellent cost/performance relationship and will not be replaced in its principal markets by any future product. The outlook for increased use in existing and newly developing forestry markets is extremely favorable. Monsanto costs have been high and national capacity generally sold out bo that the market has never been fully exploited.
0633*120
-16-
umuzuLks ($ in Millions)
dross Invest. - Sales Internal Use Total
Asiaai----------1261 iiil llil
$ 4.9 3.1 5.4
$ .2
.1
8 3.1 5.1 3.5
- 1964 g*P'tv
8.1 8.3 .4 .3
e.s 8.6
For Salesi X ROI (after tax)
2.5 2.4 3.7
4.4 3.7
Sales Grose Profit SARE Other Income Division contribution
9 2.8 3.4 3.0
9 .5 .3 .6
9 .2 9-
.2 -
.2
-
$ .3 .3 .4
3.1 3.7 1.0 1.2
_.3 ..3
.7 .9
As # of Selesi
Division Contribution Oross Profit BARE $ Sales/S Investment
9.3 17.8
8.4 .37
7.7 14.7
7.0 .66
14.0 20.9
7.4 .55
23.2 31.4
8.2 .38
23.6 33.5
7.7 .44
Selling Price/Ton Cost of Sales/Ton
9 79 81 78 9 63 69 62
78 78 54 52
Capacity - M Tona Excess Internal Use Sales
40 40 49
4 (2) 10 21
34 42 38
49 49 8 22
39 47
Return on investment is increasing to 4.4X in 1964 from 2.5# in 1961. Sinco selling prices have remained relatively stable this improvement comes from a reduction in coat resulting from the increased volume projected and the gradual elimination of purchased material.
In agriculture there la a growing awareness that urea is an economical source of nitrogen, in rice it is rapidly becoming the predominant
fertilizer since it is more efficient for aerial application and leaches less rapidly in water. The demand outlook for feed urea as a protsin supplement for ruminant cattle is favorable as cattle population in Texas and Oklahoma will increase end urea's principal competition, soybean meal prices will remain high.
-17-
0631421
CHEMSTRAMP DIVISION
Division profitability has been ($MM's)
X Return on Investment AT Gross Investment Sales Division Contribution BT Div, Cont. as X of Sales $ Sales/S Investment
1961
10.0 339.0 225.6
70.7 31.3
.67
Actual 1962
10.4 400.3 263.5
86.5 32.6
.66
iiil
9.4 489.7 285.0
95.3 33.4
.58
Budoet
10.8 550.0 312.7 118.3
37.8 .57
In 1963 investment in the divisions' products earned the following rates
of returnt
.
Loss 0 to 3% 3 to 5.8X Over 5.SX
X of Total Investment
.7
12.6 86.7
Major products reported arei
Acrilan - Total Acrilan - Carpet Acrilan - Continuous Filament Acrilan - Solution Dyed Acrilan - Textile Nylon - Total Nylon - Industrial Nylon - Textile Nylon - Textured Nylon - Tire
29
18a 19 20 21 ' 22 22a 23 24 25 26
These comprise 100X of the divisions' investment in 1963.
0633422
WATER PCB-00039714
ACRItAM - TOTAL ($ in Millions)
Gross Invest. - Sales Internal Use Total
Actual________
1964
mi mi 1963 Budoet can'tv
$85. S
$$85.5
89.8 . 105.0 --
89.8 105.0
118.9 118.9 --
118.9 118.9
For Salasi % SOI (after tax)
Sales Gross Profit BARE Other Income Division Contribution
(.7) 2.7
$26.4 $ 9.6 $12.1
$ .4 $(2.1)
34.8 17.1 12.7
.7
5.1
4.6
48.0 23.4 14.5
1.2 10.1
8.4
59.0 33.8 15.3
1.5 20.0
8.4
59.0 33.8 15.3
1.5 20.0
As % of Salesi Division Contribution Gross Profit SAKE
$ Sales/$ Investment
(7.8) 36.6 45.8
.31
14.6 49.0 36.4
.39
21.1 48.8 30.3
.46
33.9 57.2 25.9
.50
33.9 57.2 25.9
.50
Selling Prioe/lb Cost of 8alee/lb
$ .94
.84
.77
.80 .80
$ .59
.43
.39
.34 .34
Capacity - MM lbB Excess
Internal Use Sales
59.4 31.2
-
28.2
60.9
19.3 -
41.6
67.8 5.5
62.3
74.0
-
-
74.0
74.0
-
-
74.0
The above figures reflect total Acrilan sales by chemstrand including fiberstock and by-products. The increase in KOI and $ Sales/S invest ment reflect the increased volume. Price erosion has been effectively combatted with greater cash reduction, yielding higher ratios on gross profit as a percent of sales each year. Presently the major problem is producing enough fiber to meet the demand. The approved expansion program will help meet this problem as well as reduce cost to nullify price erosion.
18a-
0633423
ACRILAU - CARPET (9 in Millions)
Gross Invest. - Sales Internal Use Total
Actual 1961 12& 1963
923.6
9923.6
33.1 57.2
--
33.1 57.2
1964 Budoet Can'tv
60.4
-
60.4
60.4
-
60.4
For Sales i % ROI (after tax)
Sales Gross Profit BARE Other Income Division Contribution
As % of Salesi Division Contribution Gross Profit SARZ
$ Sales/9 Investment
(2.1) 1.0
9 6.3 $ 1.3 9 3.0
$ .1 9(1.1)
11.6 5.2 4.8 .3 .7
4.1
25.4 12.3
8.2 .7
4.8
7.6
30.7 17,0
8.7 .9
9.2
7.6
30.7 17,0
8.7 .9
9.2
(16.9) 29.4 42.8
.26
5.8 45.0 41.5
.35
19.0 48.5 32.1
.44
29.9 55.4 28.3
.51
29.9 55.4 28.3
.51
Selling Price/lb Cost of Salet/lb
9 .85 .73 .73 9 .60 .40 .37
.73 .73 .32 .32
Capacity - MM lbs Excess
Internal Use Sales
22.8 15.5
-
7.3
22.9 7.0
-
15.9
34.1 ( .9)
35.0
42,2
-
42.2
42.2
-
42.2
J.962 - KOI at 1.0%. investment increased 40% but contribution was a gain compared to previous loa*. Investment gain reflecting previously increased facilities for carpet, Revenues up with large volume gain, Prices somewhat lower with list price reductions. Costs favorably affected by large production volume gain,
1963 * ROI increased significantly to 4.1%. Investment continued up with larger use of facilities on carpet manufacture. Revenue more than doubled with volume gain at no price decrease.
J.964 Budget & capacity - ROI again increasing to 7.6%. Volume of sales and production expected to continue sizeable increases. Gain in con tribution afforded by increased revenues and lowered cost of saleB per pound.
063M24
19-
acrilan - CONTINUOUS FILAMENT ( $ in Millions)
Actual
1964
1961
1963 Budget Cao'tv
Gross Invent, - Sales Internal use Total
$.
$$"
- 3.4 -*
" 3.4
4.7 4.7 --
4.7 4.8
For Salest % ROI (after tax)
Sales Gross Profit SARB other Income Division Contribution
-
$? $$$
- (11.9)
2.0 2.0
.1 1.9 1.9
- (.8) .4 .4
-
.2 .2
--
--
(.8) .2 .2
As % of Salem Division Contribution Gross Profit SARB
$ Sales/?! investment
Selling Frlce/lb Cost of Sales/lb
Capacity - MM lbs Excess Internal Use Sales
-
$$
_ -
-
- - 10,3 10.3 - - 20.4 20.4 - 11.8 11.1 11.1
.02 .39 .39
_ 2.13 1.8S 1.85
- - 1.47 1.47
- 5.0 1.0 1.0 4.9 - -
--
*-
- .1 1.0 1.0
1964 Budget & Capacity - 1963 loss operation expected to yield small
contribution In 1964, Sweater program should provide a 2.1% ROI for this product.
20- 0633425
WATER PCB-00039717
ACRILAH - SOLUTION DYED ($ in Million*)
Gross Invest. - Sales Internal Use Total
Actual 1961 1962 1&3
$ 2.7 8.1 4.5 9- - $ 2.7 8.1 4.5
1964 Budget Cao'tv
6.2 6.2
-
6.2 6.2
For Salest % ROI (after tax)
.6 3.8 4.5
5.8 5.8
Sales Gross Profit EARS Other income Division, Contribution
$ .6 2.7 2.0
$ .3 1.3
.9
9 .3 .7 .5
9-
.1 -
9-
.7 .4
2.4 2.4 1.2 1.2
.5 .5 --
.7 .7
A* % of Salest Division Contribution Gross Profit
rare
$ Snles/9 investment
4.2
37.3 34.2
.30
23.9 48.9 26.5
.34
20.7 42.8 24.1
.45
29.5 49.1 21.6
.39
29.5 49.1 21.6
.39
Selling Price/lb Cost of Sales/lb
91.19 1.15
9 .75
.59
.97 .55
.95 .95 .48 .48
Capacity - MM lbs Excess Internal Use Gales
1.6 3.1 3.3 .9 .7 1.2 - --
.7 2.4 2.1
2.6 2.6 --
--
2.6 2.6
196? - ROI at 3.8X compared to previous year .6%. Large gain In volume resulted in increased division contribution with price levels holding and cost of sales {per lb.) down 21%.
19$? - ROI little changed at 4.6%. Investment and overhead down, the result of their absorption by Acrilan carpet, profit contribution down 35%, resulting from an 184/lb. decrease in selling price. Only partially offset by a 49 decrease in costs.
1964 - ROI increases 1.3% to 5.8%. Division contribution up 70% as the result of increased sale* volume and lower costs, only slightly offset by decreased prices.
0633426
21-
ACRILAM - TEXTILE ($ in Millions)
Gross Invest. - Sales Internal Use Total
Actual. 1961 1962 ilii
$59.2
$$59.2
48.5
-
48.5
39.9 -
39.9
1964 fcUjgSS SAP'-tY
47.5
-
47.5
47.5
-
47.5
For Salesi % ROI (after tax)
Sales Gross Profit SARI Other Income Division Contribution
(.3) 3.9
$19.1 $ 7.4 $ 9.0
$ .3 $ (.3)
20.4 10.5
7.0 .4
3.9
6.8
19.5 10.6
5.4 .4
5.6
9.6
23.2 14.4
5.9 .6
9.1
9.6
23.2 14.4
5.9 .6
9.1
As % of Sales i Division Contribution Gross Profit SAAB
$ Sales/6 Investment
(1.7) 38,8 41.8
.32
19.3 51.8 34.4
.42
28.9 54.1 27.6
.49
39.1 61.9 25.2
.49
39.1
61.9 25.2
.49
Selling PrieeAb Cost of sales/lb
51.02 ,B7 .88 $ .62 .42 .40
.82 .82 .31 .31
Capacity - MM lbs Excess Internal Use Sales
35.0 35.0 25.5 16.2 11.5 3.3 .~ - -
18,8 23.5 22.2
28.3
-
28.3
28.3
-
-
28.3
1962 - ROI at 3,9% (no return previous year). Investment decrease due to greater use of facilities in carpet production. Revenues up with volume more than offsetting list price decrease. Cost reduced significantly with increased production volume, lower raw material,
1963 - ROI up to 6.8%. investment reduced but generating 43% more contribution. Investment continuing to reduce with facilities used by carpet production. SAAB expenses down due to greater allocation of overhead to other Acrilan products.
1.964 Budget & Capacity - ROI increasing to 9.6% (up 2.8%). investment up 19%, contribution 61%. Investment up with increasing level of textile facility usage. Revenue up with volume gains more than off* setting expected price erosion, cost decreases expected with decreased fixed cost levels associated with volume and improved efficiencies.
220633427
UYLOK - TOTAL ($ in Millions)
Actual______________
1964
19-61 1962 1963 Budget Cap'tv
Gross Invest. - Sales Internal Use Total
?2S4.2 ?$254.2
311.4 384.7
-'
-
311.4 384.7
433.8 461.2
---
438.8 461.2
For Salesi % ROI (after tex)
13.7 12.8 11.1 11.9 16.7
Sales Gross Profit SARB Other Income Division Contribution
$199.2 ? 96.3 $ 23.5
?$ 72.S
229.1 108.9
26.9 .8
82.8
236.7 116.0
27.7 .7
89.0
250.0 130.9
28.2 .9
103.6
313.2 181.6
28.2
.9 154.3
As % of Sales i Division contribution Gross Profit SARG
$ Sales/? Investment
36.5 48.3 11.8
.78
36.1 47.5 11.8
.74
37.6 49.0 11.7
.62
41.4 52.4 11.3
.58
49.2 57.9
9.0 .68
Selling Price/lb Cost of Sales/lb
? 1.25 1.28 1.20 ? .65 .67 .61
1.16 1.16 .55 .49
Capacity - MM lbs Excesa Internal Use Sales
180.2 21.3
-
158.9
197.0 17.3
-
179.7
251.0 53.9
-
197.1
270.0 55.3
-
214.7
270.0
-
270.0
The above figures reflect total nylon sales by ChemBtrand including fiberstock and by-products. The decreases in ROI and $ Sales/?
Investment ratios reflect the large allocation of investment from other divisions to Chemetrand. The reduction in cost during 1963 reflects the expansion of capacity at the plants. The 1964 reduction is primarily attributable to the completion of the royalty agreement with Du Pont. The preaent plans are to expand nylon operations with increased emphasis in the overseas area. The presently approved plant expansions will further reduce our costs and should suable us to sup ply more than our domestic customers, BARB expenses will be reduced as a percent of sales, not being directly related to the sales revenue.
0633426
WATER PCB-00039720
($ in Millions^*
Actual 1961 1962
1964 Buduet Can'tv
Groas Inveat. - Sales Internal Use Total
For Saleai % ROI (after tax)
$21.0
$$21.0
26.1 - 40.4 -
26.1 40.4
35.4 .
35.4
36.8
36.8
12.6 9.6 5.5
6.4 10.1
Sales Gross Profit BARE Other Income Division Contribution
As % of Salesi Division Contribution Gross Profit BARS
6 8ales/$ Investment
$15.5 $ 6.9
$ 1.4
$$ 5.5
17.1 7.3 2.2 .1 5.2
20.3 7.3 2.0
.1 4.6
17.2 6.8 2.2
-
4.6
17.5 9,7 2.2
.
7.5
35.7 44.5
8.8 .74
30.6 43.0 12.9
.65
22,7 35.9 13.6
.50
26.4 39.3 12.9
.49
42.7 55,4 12.8
.47
Selling Price/lb Cost of Sales/lb
$1.19 1.17 1.01 $ .66 .67 .65
.97 .97 .59 .43
Capacity - MM lbs
Excess internal Use Sales
14.0 1.0
-
13.0
16.0 1.4
-
14.6
21.0 1.0
-
20.0
18.0 .2
-
17.8
19.0 -w
-
18.0
1962 - ROI down 3.054 with investment increasing 25% and no gain in division contribution. Investment increased with more facilities, buy-in allocation, and outside investments.
1963 - ROI almost halved (down to 6.5%). Investment up 55% with contribution down slightly, investment - greatly Increased with expanded facilities and buy-in allocation. Revenues - up with higher volume offset partially with much lower sales prices.
1964 Budget - ROI up slightly to 6.4%. investment off 12% with con tribution remaining about same. Investment down due to facilities
switch. Revenues off slightly with reduced volume and pricea. Cost of sales reduced with improving manufacturing afficiencies.
1964 Capacity ROI up considerably. Investment about same aa previous year with large contribution gain. Cost of sales reduced to large degree by manufacture at standard yields and sfflciency.
230633429
HYLOH - TEXTILE ($ in Millions)
Actual_______
1964
12&i I2S2. iMl )Magl Cap 'tv
Cross invsst. - Sales internal Use Total
$137.4 164.0 213.1
$-
-. -
$137.4 164.0 213.1
250.7 263.4 --
250.7 263.4
For Salest % ROI (aftar tax)
17.2 16.4 12.9 13.7 17.9
Sales Gross Profit BARE Other income Division Contribution
$111.2
$ 56.8 $ 7.7 9$ 49.1
126.1 66.4 11.1 .6 53.9
130.0 67.4 10.5 .5 57.4
134.8 78.7 10.7 .9 68.9
162.4 104.1
10.7
.9
94,3
As % of Sales i Division Contribution Gross Profit BARE .
$ Sales/$ investment
44.2 51.1
6.9 .81
44.4 52.7
8.8 .77
44.2 51.8
8.1 .61
Sl.l 58.3
7.9 .54
58.1 64.1
6.6 .62
Selling Price/lb Cost of Sales/lb
$ 1.83 $ .90
1,81 .86
1.74 .84
1.64 1.64 .66 .59
Capacity - MM lbs Excess Internal Use Sales
65.0 4.3 -
60.7
70.0 -.3
-
69.7
88.0 13 ri*
-
74,7
99.0 17.0
-
82.0
99.0 -
-
99,0
1962 - KOI down slightly (.9%). investment increase of 20% with con tribution up only 14%. investment - increased plant and outside investments. Revenues - volume up but price down 29. Cost of sales down 49, but SARE up significantly with increased selling, advertising, and development expenses.
1963 - ROI down by 3.$#. Investment up 30% but contribution up only 3%. Investment - large increases in plant facilities and buy-in allocation. Revenues - about same as 1962 with price decrease of 4%. cost of sales had only minor decrease (29).
1964 Budget - ROI up O.B% to 13.7%. Investment increased 18% with con tribution slightly exceeding at 20%. Investment - increased plant facilities and large outside investment. Revenues - volume increase significant but almoat offast by anticipated price decrease (109/lb). Cost of sales to drop substantially with increased efficiencies, higher production volume.
1964 Capacity - ROI would increase to above 1961 level (17.9%), Investment up 5% but contribution up by 37%. Capacity operation would increase potential sales volume, decrease costs with production volume gains and standard operating efficiencies.
0633430
-24-
MYLOH - TEXTURED ($ in Millions)
Gross Invest. - Sales Internal Use Total
Actual 1?61 122 1963
$23.6
$$22.6
32.5 26.3 -'-
32. S 26.3
1964 Budget CP'tv
35.1 -
35.1
36.4
-
36.4
For Salesi % ROI (after tax)
16.8 13.7
8.8
9.3 12.6
Sales dross Profit 6ARE Other Income Division Contribution
$18.4 $ 9.3
$ 1.4
$$ 7.9
23.0 11. S
2.2
-
9.3
15.1 6.3 1.5
*
4.8
16.5 8.3 1.8
-
6.5
20.0 10.9
1.7
-
9.2
As % of Balesi Division Contribution dross Profit BARB
$ Sales/? Investment
43.1 50.5
7.5 .81
40.4 SO.O
9.7 .71
31.8 41.6
9.9 .58
39.5 50.1 10.6
.47
46.0 54.7
8.8 .55
Selling Price/lb Cost of Sales/lb
$1.44 1.44 1.36 $ .71 .72 .79
1.18 1.18 .59 .53
Capacity - MM lbs Excess Internal Uee Sales
17.2 4.4 -
12.8
23.0 7.0 -
16.0
17.0 5.9 -
11.1
17.0 3.0
-
14.0
17.0
-
17.0
1963 - ROI down significantly (3.1%). Investment up 44% with contribution Increase up only 18%. Investment - plant and outside investment increases Revenues - highest ot any period with volume up and prices stable. Cost of sales increase slightly with BARE expenses up sharply due to increases in advertising. Belling and development expenses.
1*>63 - ROI down drastically to 8.8%. Investment off 19% but contribution only one-half of previous year. Investment - off with facilities switch. Revenues - off sharply with volume decrease and reduced selling prices. Cost of ealee per pound up 10% with lower volume.
1964 Budget - ROI about same as 1963. Investment up primarily through increased plant end outside investment. Revenues about Bame as previous year with volume increase offset by price drop. Cost of sales down drastically with production volume up and efficiencies improving.
1964 Capacity - ROI up by 3.3%. investment 4% above budget level with contribution up 41%. Revenues up-$3.5MM, result of Increased sales volume but costs down with production volume increases and efficiency
gains.
250633431
($ in Millions)
Actual
1964
1961
1963 Budget Cap'tv
Gross Invest. - Sales Internal use Total
$73.3
$$73.3
88.8
-
88.8
104.9
-
104.9
112.6 124,6 --
112.6 124.6
For Sales i K ROI (after tax)
8.8 6.7 6.0 7.7 16.5
Sales Gross Profit SAM Other income
Division Contribution
$43.3 $18.3 $ 4.8
$" $13.5
45.8 19.3
6.9 .1
12.5
47.5 19,9
6.9
-
13.0
51.6 24.8
7.5
*.
17.3
81.7 48.7
7.5 -
41.2
As K of Salesi Division Contribution Gross profit BARE
$ Sales/$ Investment
31.2 42.3 11.2
.59
27.2 42.1 15.0
.52
27.4 41.9 14.5
.45
33.5 48.0 14.6
.46
50.5 59.6
9.2 .68
Selling Price/lb Cost of Sales/lb
$ .91
.91
.91
.86 .86
$ .52
.S3
.53
.45 .35
Capacity - MM lbs Excess Internal Use Sales
59.0 11.4
-
47.6
59.0 8.8 -
50.2
86.0 33.7
-
52.3
95.0 35.0
-
60.0
95.0 -
-
95.0
1962 - KOI down 2,IK with increased investment and a loss in contri bution position, investment up 2154 for facility, buy-in, and outside investment. Cost and prices about aame as previous year.
19$3 - ROI down slightly to 6.OK. Investment increased 18K. Contribution about same as previous year with little change in cost of sales and prices.
1964 Budget - ROI increases to 7.7K. Investment not significantly increased - contribution up 33K. Revenues up greatly with large volume gain offset some by price decrease. Cost of sales down 86 with better facility utilisation.
1964 Capacity - ROI increases to 16. SK as the result of a 53K increase in sales volume and a 100/lb. cost reduction resulting from more efficient utilization of facilities.
0633432 -26-
WATER PCB-00039724
HYDROCARBONS DIVISIOH
Division profitability has been ($MM's)
% Return on Investment AT Oross Investment Sales Division Contribution BT Div. Cont. as X of Sales 6 Sales/$ Investment
1961
3.4 250.1 130.4
14.4 11.0
.52
Actual -1&63,
1.9 244.0 127.8
6.8 5.3 .52
-1963
2.7 251.5 148.0
12.3 8.3 .59
1964 Budoet
3.6 256.0 155.7
16.1 10.3
.61
In 1963 investment in the divisions' products earned the following rates of return i
% of Total investment
Loss 0 to 3% 3 to 5.ex Over 5.8%
26.8 12.3 44.9 16.0
Major products reported arei
Acrylonitrile
Butadiene
Ethylene & Co-Products
Production & Exploration
Refinery
Station Marketing
Styrene Monomer
Vinyl Acetate Monomer
Vinyl Chloride Monomer
All Other Monomers
.
S3S.
28 29 , 30 31 32 33 34 36 36 37
These comprise 10036 of the divisions' investment in 1963. 0633433 -27-
WATER PCB-00039725
ACRYLONITRILE ($ in Millions)
Actual_______ 1961 1962 1963
1964 Budget Can'tv
Gross Invest. - Sales Internal Use Total
$37.4 $ 3.0 $40.4
24.9 26.8 19.6 19.5 43.5 ' 46.3
26.3 25.0 51.3
26.3 25.0 SI.3
For Sales i X ROI (after tax)
(1.6) 1.5 2.9
1.4 1.4
Sales Gross Profit SAAB Other Income Division contribution
$ 3.6 9.1 11.4
$ (.2) 1.3 1.9
? 1.2 .6 .6
$ .2 .1 .3
$ (1.2)
.8 1.6
10.3 1.2 .6 .1 .7
10.3 1.2
.6 .1 .7
As X of Sales i Division Contribution Gross Profit BARS
$ Sales/? Investment
(14.2) (3.1) 13.4 .20
B.8 14.6
6.8 .40
14,3 16.7
S. 3 .40
7.2 11.8
5.7 .40
7.2 11.8
5.7 .40
Selling Prlce/lb COBt of Sales/lb
$.173 $.131
.147 .125
.145 .121
.143 .126
.143 .126
Capacity - MM lbs Excess Internal Use Sales
90.0 97.5 45.1 (5.6)
l.KD 43.0 43.3 55.1
105.0 05.3) 65.5 74.8
110.1 110.1 (33.7) (33.7) 76.0 76.0 67.8 67.3
(1) Chemstrand requirements of 23.9 MM lbs included in sales.
Demand mushroomed throughout 1963, forcing sustained high rates of operation. Increased world-wide acceptance of Acrilan, plus the decision to use acrylonitrile via new chemistry as a nylon inter mediate and growth in 'plastics use, forced a December decision to build a new plant. This reflects sb an investment increase in the 1964 budget.
For 1964 Monsanto continues to buy, sell, and use acrylonitrile to maintain our position of dominance in this chemical. As demand surged beyond supply, it is necessary to allocate acrylonitrile to both captive and outside users. Selling prices will exceed budget, due to the price rise occurring after budgets were cast. Unit costs are up, due to higher purchase price of resale acrylonitrile and increased use of purchased acetylene at Texas city.
The new plant is scheduled to be on stream in the firBt quarter of 1965.
-29-
0633434
($ in Millions)
Actual_______
1964
1961 1962 1963 Budget Cao'tv
Cross .invest. - Sales Internal Use Total
$ _ -12.7 9.8 10.8 10.9
$
--
.4 .4
?"
12.7
9.8 11.2 11.3
For Salesi 14 KOI (after t*x)
Sales
'
Gross Profit
BAKE
'
Other Income
Division Contribution
As 14 of Sales* Division Contribution
Gross Profit
SARD $ Sales/$ investment
Selling Price/lb Cost of Sales/lb
Capacity - Mil lbs
Excess Internal Use SaleB
-
$ $ 9$9
(2.6) (2.9)
1.6 (.7) . -
(.7)
6.3 (.3)
.3 -
(.6)
(.5)
6.9 .4 .5 -
(.1)
1.8
7.1 .9 .5 .4
-
-
*
$ S-
e.
-
-
(42.7) (42.3)
.6 .10
(9.1) (4.7) 4.4
.60 `
.100 .142
.094 .098
13.3 (2.6)
-
15.9
80.6 10.3
3.5 66.8
(1.6) 5.3 6.9 .60
5.9
5.5 6.7 .70
.091 .087
.091 .080
80.6 2.7 3.0
74.9
80.6
-
3.0 77.6
1963 was the first full year of production in Chocolate Bayou. Volume improvements in 1964. and general improvements in Chocolate Bayou operations contribute to cost reductions in 1964, and a marked profit improvement despite lower selling prices. A significant portion of the volume will be achieved by conversion of other C4's.
For the future, continued price pressure;is predicted, although the bottom is expected to be near.
0633439
-29-
WATER PCB-00039727
gTJiYLBHE AM) CO-PRODUCTS (f in Millions)
Gross Invest. - sales Internal Use
' Total
For Salest % ROX (after tax)
Sales Gross Profit GARB Other Income Division conatribution
AStHftl_______ - 1964 mi 1962 1963 Budget Cao'tv
$ 57.a .$ -
57.8
33.B 55. a 89.6
33.3 62.7 96.0
32.6 63.1 95.7
33.6 63.1 96.7
(.1) (10.8) ( 5.8)
* 13.9 * 1.9 9 2.0 -
* (.1)
3.9 (5.3) 2.3
-
(7.6)
13.3 (2.8) 1.4
.2
(4.0)
(1.2) 4.7
18.3 .7
1.7 .2
(.8)
26.4 4.7 1.8 .2
3.1
As % of Salest Division Contribution Gross Profit SAAB
$ Sales/0 Investment
(.5) 13.9 14.5
,20
-
60.5 .10
(30.4) (21.3) 10.4
.40
(4.4) 3.7 9.0 .60
11.9 17.9
6.6 .80
Selling Price/lb Ethylene Cost of Sle*/lb Ethylene
Capacity - MM lbs Excess Internal Uae Sale*
Ethylene Ethylene Ethylene Ethylene
* .051 9 .044
.048 .048
165.0 246.3 601.4
(107.8) (B7.6) 144.9
- 335.9 399.9
272.8(1) -
56.6
.045 .045 .041 .039
601.4 67.3
451,3 82.6
601.4 -
451.3 150.1
(1) All intordlvision Bales.
A multiplicity of plant performance problems lad to continuing loaaaa
in 1963, Quality problama plua unaxpactadly high volume* of aone of
the las* valuabla product* also daprasaed aalaa. Significant volume*
wets sold at disposal pricas.
'
Technical effort was high throughout the year and certain of the problems aro responding favorably. Hanca improvement in operations and higher volumaa are forecasted to produce a marked improvement in the profit picture, but coupled with continued price erosion, a net loss is again forecast. While a massive effort continue* to improve the situation, no dramatic change* are expected, as the ill* are due to such a variety and number of problems.
300633436
PRODUCTION ASP EXPLORATION ($ in Hillions)
Actual
1964
1961
1963 Budget Cao'tv
Gross Invest. - Sales Internal Use Total
$72.4
$$72.4
72.3 -
72.3
74,3
-
74.3
.61.9
81.9
For Sales; % ROl (after tax)
7.2 4.2 3.6
3.7
Sales Gross Profit SAKE Other income Depletion etc. Tax Credit Division Contribution
$27.5 $ 5.4
$ .7
$$ 3.0 $ 7.7
24.0 1.6 .4
-
2.4 3.6
23.7 3.0 .5 * 1.4 3.9
24.0 2,7 .5 -
2.0 4.2
As % of Sales; Division Contribution
Gross Profit SAKE $ Sales/S investment
26.0 19.7
2.4 .40
15.1 6.5 1.7 .30
16.6 12.6
2.2
.30
17.3 11.4
2.3 .30
Sales - Crude Oil - MM Bbls Natural Gaa - MM HOP LPG - MM Bbls
e.o
22.6 .9
7.0 23.1
.8
6.5 27.2
.7
6.3 32.0
.7
Profits were adversely affected because (1) revenue was down due to several important pressure maintenance projects performing at lower than anticipated levels; (2) relatively high rates of natural decline in productivity from Hon Van's property; (3) less than satisfactory exploration program which failed to provide adequate opportunities for high revenue producing development drilling; (4) loss in Income tax credits; and (5) reduction in price of crude oil.
Costs were reduced as a result of significant economies overhead and operating expenses. During the next three years it is not antic ipated that changes made in our programs will provide noticeable improvement in either profits or % RQI above the 1963 level. Improvements will issue from increased revenues from both the pressure maintenance program on Hon Ven's property and gas aales from reserves now awaiting market. Among the principal problems are competition for both exploration prospects and producing property acquisitions and the coat price squeeze.
Plans for improvement ere (1) the application of improved exploration techniques; (2) increased emphasis on new oil recovery methods; and (3) producing property acquisitions.
063343?
WATER PCB-00039729
REFINERY <$ in Millions)
dross invest. - Bales Internal Use Total
Actual 1161 1962 121
$36.2
$$36.2
35.4 1.2
36.6
38.6 1.2
39.8
1964 Budget Cap'tv
37.3 1.2
38.5
37.3 1.2
38.5
For 8alesi * ROI (after tax)
Sales Gross Profit SARE Other Income Division Contribution
As * of Salest Division Contribution Gross Profit BARB
$ Sales/5 Investment
.7
$58.2 $ 1.8 $ 1.3 $$ .5
3.0
54.4 3.3 1.1
2.2
3.8
58.5 4.1 1.1
-
3.0
.9 3.0 2.2 1.50
4.1 6.1 2,0 1.50
5.2 6.9 1.8 1.60
4.8
59.4 4.8 1.2
3.6
4.8
59.4 4.8 1.2
3.6
6.1 8.0 2.0 1.60
6.1 8.0
2.0 1.60
Belling Price/bbl Cost of Sales/bbl
$4.08 4.05 4.08 $3.97 3.80 3.78
4.10 4.10 3.74 3.74
Bales - Refined Olle - MM bbls 12.9 12.2 12.5
12.5 12.5
Improvement in profitability is due primarily to a decrease of 124 per bbl. in price of crude in 1962 and a gradual increase in share of import quota being oredited to refinery operations. Selling prices have declined but on average an overall gain of about 24 per bbl. in sales revenue has been effected by improved product mix. with V.S. refining capacity estimated to exceed demand by 15-20* for the next five years, there is little likelihood of material price improvement for gasoline, middle distillates and residual fual which comprise 80* of refinery production. Biggest opportunity for improving profitability lies in projected growth of paving and specialty grades of asphalt and better market selectivity for gaso line and diesel fuel. Chances for improved asphalt profitability are excellent due to proximity of low cost but high quality asphalt crude and manufacturing know-how. Better market selectivity for gasoline and diesel fuel can only be achieved through expansion of
station marketing facilities. This is being done but Involves our gaining greater share of highly competitive market in areas favor able to refinery from transportation coat standpoint and will of ' necessity require several years. Basic weaknesses are limited to refining capacity and rapid obsolescence of proceeses.
-32 0633438
STATIOH MARKET IMG ($ in Millions)
Gross Invest. - Bales
internal Use Total
Actual ssi 1962 1963
$16.3
$$16.3
16.3 -
16.3
17.8 -
17.8
1964 Budget cap'tv
18.0 *
18.0
For Salest * KOI (after tax)
Gales Gross Profit BARE Other Income Division Contribution
(1.5) (2.9) (.3)
$22.9 $ 3.4 $ 3.9
$$ (.5)
23.3 3.3 4.4 .1
(1.0)
25.0
4.7
4.7 -
.6
27.5 5.2 5.0 .2
'
As * of Sales i Division Contribution Gross Profit BARE
8 8slea/$ Investment
(2.2) 14. e 17.3
1.40
(4.2) 14.3 18.7 1.40
(.1) 18.8
19.0
1.40
1.1 18.9
18.3 1.50
Selling Price/Gal Cost of Sales/Gal Sales - MM Gals
$.141 $.120 153.7
.139 .120 158.9
.144 .117
166.0
.147 .119 179.2
Slight improvement in profitability has resulted from increased sales volume - 17* since 1961 - and an improvement of 1/29 gallon in weighted average unit selling price. Both were practically offset by increased selling costa resulting from higher commission rates to meet competition and increased unit cost of sales through service stations. Inflated prices for land and higher building costs have sharply increased unit selling cost at service stations during first year of operation, when volume seldom reaches more than 75* of potential. Since we have been adding to our Class A Stations at rate of 10* annually during past two years, this has contributed materially to unit selling expense. Through increasing volume at stations constructed in past two years and disposition of old and marginal stations, we can expect a alight decline in selling costs for the future, arose profits are estimated to remain relatively stable for the next five years. With volume growing at about 8* annually, net income should double, but will still be well below our goal of 4* on gross investment.
0633439 -33-
WATER PCB-00039731
STYREHE MOHOMEB ($ in Millions)
Gross invest. - Gales Internal Use Total
Ae.tj.usA______
im ilM 126A
$23.3 $17.2 $40.3
39.4 22.7 62.1
39.9 25.4 65.3
____iiii
Budcet Cao'tv
36.5
25.0 61.5
36.5 25.0 61.5
For Galesi % noi (after tax)
Gales Grose Profit BARE Other Income Division Contribution
AS * Of Salesl Division Contribution Gross Profit GARB
9 Gales/3 Investment
16.1
$28.3 $ 0.9 $ 1.2 $ .1 $ 7.8
11.3
29.2 10.5
1.4 .2
9.3
10.6
27.3 9.6 1.0 .2 8.8
27.4 31.4
4.3 1.20
31.8 35.9
4.9 .70
32.2 35.0
3.7 .70
10.8
26.7 8.7 l.l .3 7.9
10.8
26.7 8.7 1.1 .3 7.9
29.6 32.7
4.2 .70
29.6
32.7 4.2 .70
Gelling Prlce/lb Cost Of Sales/lb
$.107 $.073
.101 .064
.095 .062
.086 .086 .056 .056
Capacity - MM lba Excesa Internal Use Gales
472.5 27.1
186.9 258.3
516.0 11.1
205.4 299.5
552.0 8.0
248.3 295.7
552.0 552.0 (12.4) <12.4) 260.0 260.0 304.4 304.4
Generally good performance was realized throughout 1963. The plant was pushsd to capacity and son* sacrifice in yields was required to attain needed volumes. An expansion project was completed during the year to recoup the yield losses. It presently appears for 1964, however, that the plant will again be pushed to. its limits to produce needed volumes
These volume inoreases have helped to offset the severe price pressures being felt in this product group. With the entrance of a major oil pro ducer into styrene (Amoco) and the expansion by Carbide, continued price pressure ie expected. Profits ere again forecasted to suffer, despite significant coat improvement, principally in lower raw material prices. Over-all, the product line continues to be the pace-setter in the Hydrocarbons Division.
34 0633440
" VINYL ACETATE MONOMER ($ In Millions)
cross invest, - sales Internal Use Total
For Salasi 54 SOI (after tax)
Sales Gross profit SARB Other Income Division Contribution
As 54 of sales
Division Contribution Gross Profit SAPS $ Sales/? Investment
Actual________ 1961 1331 la&i
$ 1.1 3.3 6.4
9-
.7 2.7
$ 1.1 4,0 9.1
1964
Budget Cap'tv
8.6 2.3 10.9
8.6 2.3 10,9
(3.0) (1.8) (4.1) 1.0 1.0
$ .3
.9 2.4
4.2 4.2
9 (.1) (.1) (.4) .3 .3
9 - .2 .2 .2
9- - -
.1 .1
$ (,U (.1) (.6) ,2 .2
(23.7) (14.0) (23.2) 4.1 4.1
(15.9) (10.8) (18.4) 7.8 7.8
6.8 3.5 6.0
4.9 4.9
.30 .30 .40
,50 .50
Selling Price/lb Cost of salea/lb
Capacity - MM lba
Excess Internal Use Sales
6.155 $.179
-
2.0
.145 .160
-
4.9 6,1
.124 .147
45.0 16.8
9.0 19.2
.120 .111
45.0
-
10.0 35.0
.120 .111
45,0
-
10.0
35.0
The new vinyl acetate plant performed quite well in the first year of operation {on stream on February 11, 1963 -- previous years' data re present conversions). Capacity operation is forecast in 1964, resulting in a marked Improvement in cost of sales. Price deterioration has been so severe that negligible profits are expected from this product line. The sales shown are almost all'to Shawiniganj hence about 93% of total production is captive.
About 4054 excess capacity plagues this industry and further price pressures are expected. Higher volumes from existing facilities are
one way to combat these pressures. Fortunately, there are Indications that 15-3054 additional production capacity may be achieved, although in 1964 acetylene shortages will prevent demonstrating these higher rste*.
0633441
-35-
WATER PCB-00039733
VINYL CHLORIDE MOMOMER ($ in Millions)
Oross Invest. - sales Internal Use Total
Actual_______
1964
am 1962 I2J && gap* tv
6 5.1 9 15.4
9 20.5
5.4 16.4 21.8
4.2 16.1 20.3
3.3 16.5 19.8
3.3
16.5 19.8
For Saleat % AOI (after tax)
(1.3) 1.9 .9 1.6 1.6
Salaa Gross Profit SAAB Other Income Division Contribution
As % of saleat Division Contribution Gross Profit SAAB
6 Sales/6 Investment
9 1.7 99 .2
99 (.2)
2.5 .3 .1 -
.2
1.9 .1
.1 .1 .1
(8.2) (.5)
9.4 .30
8.3 11.5
5.2 .50
4.1 6.3 4.6 .50
1.6 1.6 .2 .2 .1 .1
--
.1 .1
6.5 6.5 9.2 9.2 3.1 5.1 .50 .50
Selling Price/lb Cost of Sales/lb
Capacity - mm lbs Excess Internal Use Salas
$ .075 9 .076
.077 .068
.077 .071
.071 .071 .064 .064
126.0 30.6 72.6 22.8
138.0
1.7 104.3
32.0
138.0 (3.9)
117.1 24.8
138.0 138.0
(9.5) (9.5) 126.0 126.0
21.5 21.5
Sals* were only a modest factor in vinyl chloride in 1963 as ovar 80S of production was used captivaly. Emphasis on acrylonitrils production limited supplies of acetylene for vinyl chloride. It was therefore necessary to operate the facilities in a less economical fashion (oxidative chlorination) causing a small rise in unit costs and the resulting drop in 801.
Sales continue to be a minor factor in 1964 with around 85% used captively. The slight improvement in aoetylene supply via purchase and expansion is forecasted to permit an improvement in the cost of sales, and an offset to lower selling prices. Although polymer supplies ara tight, excess industry capacity continues in monomers.
-36-
0633442
ALL OTHER MONOMERS ($ In Millions)
dross Invest. - Sales Internal Use Total
For Salem 74 ROI (after tax)
Actual_______ 1961 mi 1963
$ .6 .6 .4 $ 4.8 5.0 5.4 $ S.4 5.6 5.8
30.1 7.6 8.9
1964 &>aet SspJix
.5 .5 5.4 5.4 5.9 5.9
11.3 11.3
Sales arose Profit SAKE Other Income Division Contribution
$ .9 .3 .3
.3 .3
? .4 .1 .1
.1 .1
9- - - ' - -
$- .
_
$ .4 ,1 .1
.1 .1
As 74 of Sales i Division Contribution Gross Profit SARE
$ Sales/# Investment
41.6 43.7
3.6 1.50
25.1 34.5
9.4
.60
26.2 31.5
6.0 .70
34.6 37.2
3.8 .70
34.6 37.2
3.8 .70
Selling Price/lb Cost of Sales/lb
$.030 $.017
.036 .024
.038 .026
.032 .032 .020 .020
Capacity - MM lbs Excess Internal Use Sales
86.4 (12.8)
70.1 29.1
B6.4
(11.5) 88.5
9.4
86.4 (32.5) 111.1
7.8
86,4 86.4 (39.6) (39.6) 115.4 115.4
10.6 10.6
These consist principally of methanol, which is used over 9074 captlvely in other divisions.. Sales are therefore minor factors Wide-open operations ara expected to continue throughout 1964. Because of surging Plastics Division demands for methanol (used in manufacture of formaldehyde), the timing on purchase of the other half of the methanol plant is being re studied..
0633443
-37-
WATER PCB-00039735
INORGANIC DIVISIOM
Division profitability has been ($MM's)
1961
74 Return on Investment AT Gross Investment Sales Division Contribution BT Div. Cont. as 74 of Sales 5 Sales/$ Investment
6.4 150.2
125.4 17.4 13.9 .83
Actual 1962
6.1 167.3 132.4
19.3 14.6
.79
1963
6.8 187.0 146,2
24.6 16.8
.78
1964 Budoet
7.3 196.8 154.8
27.5 17.8
.79
In 1963 investment in the division*1 products earned the following rates of returni
Loss 0 to 3*
3 to 5.8)4 Over 5.6)4
74 of Total investment
3.5 -
IS.2 78.3
Major products reported arei
Pace
ACL'B Alkylates All - Condensed & fluffy Caustic Potash Chlorosulfonlc Acid Copper Project DCP Anhydrous & Dihydrate Electronic Chemicals Phosphoric Acid - Food Phosphoric Acid - Other Potassium Phosphates MCP - All Grades Santocele SMP Eterox-Phenol Base STP - All Grades Sulfuric Acid Syton-Mertone TSP Crystal TSPP Vanadium Catalyst
39 40 41 42 43 44 45 46 47 48 49 50 ' 51 52 S3 54 55 56 57 58 59
These comprise 78)4 of the divisions1 investment in 1963.
0633444 -38-
WATER PCB-00039736
ACLl* ($ in Million*)
1961
1964 1963 Budget cap'tv
Gross Invest. - sales internal Use Total
$ 3.9
$$ 3.9
6.5 13.3 - --
6.5 13.3
12.4 -
12.4
12.9 -
12.9
For Salesi % ROI (after tax)
(3.6) 6.1 3.4 11.6 22.3
Sale* Gross Profit BARE other income Division Contribution
$ 3.3 $ (.1) $ .2
$$ (.3)
4.5 1.2
.4
.8
7.0 1.6
.7 -
.9
9.2 13.6 3.7 7.1
.7 1.1 -
3.0 6.0
As % of Sales t Division Contribution
Gross Profit BARB $ Bales/$ Investment
(6.7) (1.4) 7.3
.66
19.3 25.9
7.7 .69
13.3 22.9
9.6 .53
32.7 40.5
7.9 .74
44.2 52.1
7.9 1.05
Selling Price/lb Coat of Sales/lb`
$.654 .609 .538 $.663 .451 .415
.518 .515 .308 ,246
Capacity - MM lbs Excess Internal Use Sales
7.5 7.7 23.5 26.6 26.6
2.3 .2 10.3 8.7 -
.1 .1 .1
,1 .1
5.1 7.4 13.1 17,8 26.5
ACL'* have been made at Everett since 1958) however, they were not profitable until 1962. During this period the plant was expanded and the product line increased from two to four products. Everett operated at capacity in 1962. Sale* increased because of Colgate's increased use of ACL 59 in market development of "Action". During 1962 the larger commercial facilities at Krummri.ch were under con struction and the new cyanuric acid plant at El Dorado was built. These were started up the first quarter of 1963.
Our current basic strength lies in low unit costs which have been achieved because of the greater divisor, the new CYA process and the basic raw material poBition which goes back to KC1 and natural gas.
One problem appears to be a softening of the market which may make it difficult to sustain the forecast sales volume in 1964.
-39-
0633445
ALKYLATES ($ in Millions)
Actual______________
1964
1961 1962 1961 Budget Cap'tv
gross Invest. - Sales Internal Ose Total
For Salesi X R0I (after tax)
$ 11.7 $ ,3
$ 12.0
12.5
-
12.5
14.0 .4
14.4
20.5 .8
21.3
20.2 .8
21.0
11.2 13.7
9.5
2.9 1.1
Sales Gross Profit SARE Other Income By Product Gross Profit Division Contribution
As % of Salesi Division Contribution Gross Profit SARE
$ Salea/$ Investment
$ 12.5 $ 3.3 $ .9
$$ .3 $ 2.7
12.4 4.2 1.0 -
.4
3.6
11.1 3.5 1.0
-
.3 2.8
12.3 1.9 1.0
-
.3 1.2
9.7 .9 .8
-
.4 .5
21.8 26.2
7.3 1.07
28.7
33.5 7.7
1.00
24.9 31.7
9.6 .80
10.0
15.0 7.9 .60
5.0 9.2 7.9 .48
Selling Price/lb Coat of Sales/lb
Capacity - MM lbs Excess Internal Use Sales
$ .108 $ .080
.104 .069
.097 .066
140.0 10.9
13.2 115.9
140.0 5.7
14.4 119.9
150.0 22.0 13.2
114.8
.095 .095 .081 .087
117.1 (27.7) 15.8 129.0
117.1
-
15.8 101.3
The "Alkylate" product group includes Alkylbenzene and by-products (HAN and LAN).
The major problem of this product line ie conversion to biodegradability This transition is taking place in 1964 when biodegradable alkylates will be made from purchased olefins. By January 1965 these raw materials will be made at chocolate Bayou from purchased paraffins. New capital of $9*600,000 is being installed to do this. Refining of the crude alkylbenzene will take place at Krummrich, but about $2,200,000 of the Krummrich assets will be obsolete. After tax earnings on the new procesa and total investment will range between 9 - 10)4 starting in 1965.
0635446
-40-
AU, - COHDEBSED AMD FLUFFY ($ in Million*)
Actual_______
1964
ilii 1212 igM Budget Sap'tv
dross Inveat, - sale*
Internal Use Total
8.2 ft 8.2
6.4 . 7.9 --
6.4 7.9
6.9 7.5 -.
6.9 7.5
For Balasi * HOI (after tax)
5.3 3.4 4.1
3.2 6.6
Sale* Oroas Profit BARS Other Inoom* Depletion Tax Credit DiviaIon Contribution
* 7.4 6.6 8.3
t 1.3
.9 1.3
$ .5 .3 .8
$- - -
$ .1
-
.1
f .9 .4 .6
7.1 11.4 1.0 1.8
.6 .9 -. - .1 .4 1.0
Aa % of Sal**t Division Contribution Oroaa Profit BABB
$ Balea/4 investment
11.6 1B.0
7.3 .91
6.2 13.2
7.7 1.02
7.1 15.8
9.6 1.03
6.0 13.4
7.9 1.02
8.4 15.8
7.9 1.53
Selling Price/lb Coat of Sal**/lb
.081 .066
.073 .063
.070 .059
.069 .069 .060 .058
Capacity - MM lb* Excess
Internal U*e Sale*
197.9 66.1 -
91.8
163.4 73.6 -
89.8
161.2 41.9 -
119.3
164.3 62.3 -
102.0
164.3 _ .
164.3
The product "all" derive* it* profit* from th* Monaanto mad* raw mat*ri*l* Sterox Off and STP. Th* oonv*r*ion and packaging ar don* at co*ti *o that any reduction in thi* *r*a i* pa***d on to Lever.
Th* 1964 budgeted aalaa, projectad on 1963 firat aix month* actual, ar* now expected to b* 110 million pound*, Future profitability 1* dependent upon the profitability of th* raw material*. For a diacuaaion of them refer to "Sterox - Phenol Baaed" and "STP".
-41 0633447
WATER PCB-00039739
flMOTM. msfl ($ in Millions)
Actual
1964
1961 1962 1963 Budget Cap'tv
gross Invest. - Sales
Internal Obo Total
$ 1.4 3. S 1.8 $- - " $ 1.4 3.5 1.8
1.8 2.0 -
1.8 2.0
For Salesi % R01 (after tax)
7.1 3.3 7.2 11.5 18.9
Salsa Gross Profit BARE
Other Income Division Contribution
$ 1.1 1.2 1.9 $ .3 .3 .4
$ .1 .1 .1 $- - -
6 .2 .2 .3
1.9 3.8 .5 1.0 .1 .2 --
.4 .8
As % of Sales Division Contribution Gross Profit BARE
$ Salas/9 investment
20.0 28.4
8.4 .74
19.6 28.2
8.9 .35
14.5 20.5
6.3 1.03
22.6 28.1
5.7 1.06
20.8 26.4
5.7 1.89
Selling Price/lb cost of Salee/lb
$.069 .067 .066 $.049 .048 .052
.066 .066 .048 .049
Capacity - MM lbs Excess Internal Use Sales
46.8 13.4 18.0 IS.4
48.2
14.0 16.1 18.1
81.0 19.7 33.0 28.3
85.5 28.6 28.8 26.1
85.5
28.8 56.7
KOH la used captively for ACL and WGK, TKPP at Augusta and Carondelet and ia sold from both producing planta at WGK and Anniston.
The investment in 1962 ia high due to the construction in progras allocation, from Organic for the facilities at WOK, which did not start producing KOH until March 1963. Costa were high in 1963 due to this start-up but division - contribution and- gross profit as a percent of sales are expected to return to former levels in 1964.
KOH profitability is excellent relative to its substitution product HaOH. The major KOH problem is involved with HaOH and chlorine. It is the problem of optimising use, capacity and distribution from two producing points end many consuming points.
0633446
WATER PCB-00039740
smswms.**?, &.m ($ In Million*)
Actual_______ 1961 1962
1964 Budget Cap'tV
Ores* Invest. - sales Internal Us* Total
For Saleaa * ROl (after tax)
3 .6 $ .3
* .9
.7 .7 .4 .3 1.1 1.0
.6 .7 .4 .4 1.0 1.1
27.4 21.8 31,9 28.5 35.5
Sale* Orosa Profit SARB other income Division contribution
As % of Salesi Division Contribution Orosa Profit SARB
3 8*les/3 Investment
9 .7 .7 .9
9 .4 .4 .5
* .1 .1 .1
9-
-
3 .3 .3 .4
.9 1.2 .4 .6 - .1 --
.4 .5
46.4 54.8
8.4 1.23
46.0 54.7
8.9 .99
50.2 56.4
6.3 1.32
43.2 48.8
5.7 1.37
39.6 45.5
5.7 1.86
Selling Price/lb Cost of Sales/lb
3.038 .037 .037 3.017 .017 .016
.038 .038 .019 .021
Capacity - MM lbs Excess Internal Vue Sales
43.2 3.6
22.0 17.6
43.2 (.5)
24.3 19.4
43.2 (3.5) 23.6 23.1
S8.2 10.3 25.2 22.7
58.2 -
25.2 33.0
The quality of Monsanto'* chlorosulfonlc acid ha* bean a major problem for the past aeveral year*. Du Pont ha* been a leader in supplying low Iron and low color acid. Monsanto ha* been able to follow Du Pont1* lead by reducing the iron equipment in the system and by selectively using the HC1 ga*. The impurities in adme of this gas restricts its use to the manufacture of chloroaulfonio acid for captive u*e, which can tolerate these impurities.
Increased demand, both captive and sales, is requiring expansion within the next twelve month*. Start-up of a contemplated project at Everett increaaed 1964 budgeted costa, but it is now felt that suf ficient good quality HCl gae is available at Krummrich to meet tales demands. The total raw material supply should be sufficient for n chloroeulfonic acid capacity of 72mm Lbe./ifr.
Profitability ehould continue high.
430633449
POPPER P.6QJEgT (9 in Millione)
Actual
1964
mi mi 1963 Budget Cap'tv
Gross Invest. - Sales Internel Use Total
9 9 9
.5 2.6 2.7 --
.5 2.6 2.7
For Salesi % SOI (after, tax)
Sales Gross Profit BARB Other Income Division Contribution
9 9 9 9
$
(82.2)
.8 (.8)
(19.2) (21.9)
1.0 -
(1.0)
-
1.2 .
(1.2)
As % of Salesi Division contribution Orose Profit BARB
$ Sales/S investment
Selling Price/lb Cost of Bales/lb
Capacity - MM lbs Excess Internal Use Sales
9 $
- -. - --
--
__ --
_. - _. - -. " --
Monsanto began operation of the Kansas City plant of Universal Minerals and Metals'.in 1963 as a pilot plant to acquire market process and design data for a full scale commercial copper powder
plant. This operation is continuing in 1964, By 1965 construction of a full scale commercial unit is expected to be started with
operations to begin in 1966. Projected investment is in the order of 515MM, with pretax Division Contribution of 2054 to be achieved in 1969 - 1970.
0633450
-44-
WATER PCB-00039742
PCP AMHYDROW-AWP dihydrate ($ In Million*)
gross Invest. - Sales Internal use Total
Actual 1961 1962 1963
9 a.5 2.5 2.8 9- - 9 2.3 2.5 2.8
1964 udae S&PJ&E
3.0 3.0 -
3.0 3.0
Por Sales % BOI (after tax)
Salas dross Profit SAKE Other Income Depletion Tax Credit Division Contribution
13.6
9 2.3 9 .7 .1 9$ .1 9 .7
11.3
2.4 .7 .1 .6
11,8
2.5 .7 .1 .6
12.7
2.7 .9 .1 .8
12.1
2.3 .8 .1
.7
As % of Balest Division, Contribution dross Profit SARB
6 Sales/S investment
28.6 31.9
5.3 .92
23.4 28.0
6.0 .94
23.3 29.0
5.2 .92
28.4 32.9
5.3 .90
29.6 34.0
5.3 .82
Selling Price/lb Cost of Bales/lb
9.077 9.052
.075 ,054
.074 .053
.076 .076 .051 .050
Capacity - MM lbs Excess
Internal Use Sales
56.2 4.9
21,1 30.2
39.8 8.9
19.1 31.8
56.5 .1
22.2 34.2
56.8 (3.2) 24.0 36.0
36.8 -
24.0 32,8
Reduction In phosphorus coat* we* primarily responsible for the improvement to 11,8* BOX in 1963. The high level of profitability of thie product ie due in large part to relatively old proceae equip ment thereby providing a low unit investment. In 1964 a major ex pansion will be neceseary and unit investment will be increased and with no yield improvement, the level of profitability for this product will go down. Total profit dollars will, of course, increase.
However, stable pricing and technological advantage* that we hold and gradually falling phosphorus costs should maintain the profit ability above product group average of 10.W in 1963.
-43-
0633451
ELECTRONIC CHEMICALS ($ in Millions)
... ...... ftSfcyftl,
- 1964
1961 1962 1963 Budget Cap'tv
Gross invest. - Gales Internal Use Total
For Salasi # KOI (after tax)
sales Gross Profit BARB other Income Division Contribution
? -.7
?9 4.7
5.2 -.
5.2
6.0
-
6.0
7.4 7.5 -
7.4 7.5
(15.0) (16.3) (12.2)
? 1.6 $ (.6)
9 .0 99(1.4)
2.4
(.9) .9 -
(1.8)
2.4 (.7)
.8 -
(1.5)
(8.2) (7,0)
3.9 -
1.2
-
(1.2)
4.5 .3
1.4
-
(1.1)
As # of Salesi Division Contribution Gross Profit
BARE
$ Sale*/? Investment
(92.6) (40.1) 52.6
.34
(75.8) (36.6) 39.2
.45
(63.7) (29.4) 34.4
.40
(32.9)
(.8) 32.1
.52
(24.5) 7.6
32.1 .60
Selling Prloe/gm CoBt of Salee/gm
91.19 1.31 .777 $1.66 1,79 1.01
.440 .467 .443 .431
Capacity - MM gm Excess Internal Use Sales
2.6 3.1 5.3 1.2 1.2 2.1
.1 .1 .1 1.3 1.8 3.1
8.1
(.9) .2
B.8
8.1 (1.7)
.2
9.6
Intense competition, high technology and rapid change charaterize this business.
Float zone realized a gross profit from September 1962 through July 1963, A 40# price cut by Dow Corning eliminated further gross profit until January 1964. We expect price stabilization and cost related prices to provide a net profit by the fourth quarter of 1964.
Fierce competition, chaotic pricing and our high cost process have prevented profits from pulled crystals in the paBt. Future profits are expected from antimony doped material used captively and sold for epitaxial silicon because several companies went out of business and we developed a lower cost process.
ft profitable operation will be achieved in 1965 with improvement to an after tax return on about ?10MM Investment in 1968 of 11#.
-460633452
PHOSPHORIC ACID - FOOD ($ in Millions)
Gross Invest. - sales Internal Use Total
Actual_______ 1961 mi 1963
1964 Budaet Can'tv
? 4.5 $ $ 4.5
4.5 -
4.5
5.0
-
5.0
5.5 6.0 -.
5.5 6.0
For Galesi ft ROI (after tax)
12.1 13.4 13.9 15.6 27.1
Sales Gross Profit BARB Other Income Depletion Tax Credit Division Contribution
As ft of Sales i Division Contribution Gross Profit SAKE
5 Sales/$ Investment
Selling Prlce/lb Cost of Sales/lb
$ 3.6 4.0 4.2 $ 1.1 1.3 1.5 9 .2 .2 .2
$- - -
9 .1 .1 .1 9 1.0 1.2 1.4
4.8 8.6 1.9 3.6
.3 .5
--
.1 .1 1.7 3.2
27.5 29.1
5.3
.80
9 .097 $ .069
29.2 32.8
6.0 .88
.097 .065
32.2 35.0
5.3 .83
.095 .062
35.4 39.1
5.3 .88
.095 .058
37.3 41.0
5.3 1.45
.095 .056
Capacity - MM lbs Excess Internal Use Sales
547.6 35.7
475.3 36.8
565.1 30.9
493.0 41.2
631.7 37.1
550.7 43.9
652.4 40.1
561.9 50.4
652.4 -
561,9 90.5
The Increase in phosphoric acid profitability to 13.9)4 ROI in 1963 was due primarily to lower phosphorus coBt. Further improvements from future phosphorus cost reductions will probably be at least partially offset by expense in increased customer service' such as marketing assistance for spent acid and competition in some areas from new producers. The price of this product is expected to remain stable, even modest increases over the next few years are anticipated. Sales volume growth is expected to continue at 5% per year.
The profitability of this product should remain above 10ft.
-47 0633453
CHOSPHOiUC ACID_^_QTHER (5 in Millions)
Actual
1964
1961 1962 196? Budget Cap'tv
Gross Invest. - Sales Internal use Total
For Salesi % R01 (after tax)
$ 13.6 $9 13.6
12.7
-
12.7
12.9
-
12.9
12.5
-
12.5
13.4
-
13.4
3.4 1.6 4.0
5.3 10.0
Sales Gross Profit SARE Other Income Depletion' Tax Credit Divieion Contribution
As % of Salesi Division Contribution Gross Profit SARS
$ Sales/? Investment
9 8.5 8.0 8.8
9 .5 .3 .9 9 .4 .5 .5 9- - -
9 .4 .3 .3 9 .5 .1 .7
8.6 16.0 1.5 2.9
.5 .8
--
.2 .3 1.2 2.4
5.9 1.6 8.3 13.7 15.1
6.2 4.0 9.9 16.8 18.2
S.3 6.0 5.3
5.3 5.3
.63 .63 .68
.69 1.19
Selling Price/lb Cost of Sales/lb
Capacity - MM lbs Excess Internal use Sales
9 .070 9 .066
.065 .063
.066 .059
207.8 6S<9 -
121.9
194.2 72.3
-
121.9
234.2 101.1
-
133.1
.066 .066 .055 .054
235.0 104.7
-
130.3
235.0 (7.2)
-
242.2
Part of the improved profitability hae resulted from lower phosphorus cost, but more significant was the improved net back price and lower coBt through more attention to marketing plans. Tank car packing and shipping costs were reduced significantly by increasing the number of trips per car per year and refusing to accept'business below a set profitability level.
In the future, this marketing program will be made still more effective and phosphorus cost at lower levels will continue to improve the profitability of this acid.
0633454
48-
WATER PCB-00039746
POTASSIUM PHOSPHATES ($ in Millions)
Gross Invest. - Bales Internal Use Total
Actual_______ im 1962 mi
9 2.2
59 2.2
2.7 3.9
--
2.7 3.9
1964 Budget Can'tv
4.1 4.1
--
4.1 4.1
For Salesi % ROI (after tax)
12.3 e.o 13.6 15.7 18.5
Bales Gross Profit BARS Other Income Depletion Tax Credit Division Contribution
9 2.4 2.1 3.6
9 .6
.5 1.2
9 .1 9-
.1
-
.2
as
9 - - .1
9 .5
.4 1.1
4.0 4.2
1.5 1.8 .2 .2 -
--
1.3 1.6
As * of salest Division Contribution Gross Profit SAAB
9 Sales/? Investment
21.9 29.1
5.3 1.11
20.6 25.B
6.0 .78
29.8 34.2
5.3 .92
33.2 38.0
5.3 .97
37.1 41.9
5.3 1.02
Belling Prlce/lb Cost of Selee/lb
Capacity - MM lbs Bxcsss Internal Use Sales
9.126 9.094
25.0 5.6 .3
19.1
.122 .090
26.8 9.1 .2
17.5
.120 .079
34.2 4.1 .3
29.8
.129 .080
33.0 2.0 .3
30.7
.129 .075
33.0
-
.3 32.7
Profitability in 1961 wa* up aharply over 1962 because of a much higher laval of market participation, a sharp growth in tha market and lower phoaphorua coats. Downward price adjustments are foracaat for potassium phosphates to make liquid detergents more competitive with dry products, This downward trand could reduce profitability by approximately two percentage points. Thin in large part will be offset by lower phosphorus costs, but additional potassium phosphate facilities are planned for 1965 and 1966. The addition of capital for these new facilities will obviously cause a dip in profitability leval until a reasonable capacity level is reached.
490633455
MCP - ALL GRADES {$ in Millions)
oross Invest. - Sales Internal Use
Total
Actual_______ 12S1 122 1261
$ 2.0 2.3 2.0
9-
-. -
9 2.0 2.3 2.0
1964 fiHtfqet. Cap'ty
2.2 2.2 -.
2.2 2.2
For Salesi % SOI (after tax)
7,1 5.5 8.5
8.4 9.3
sales Gross Profit SAKE Other Income Depletion Tax Credit Division Contribution
9 1.6 1.6 1.7
9 .3 .3 .4
9 .1 .1 .1
9- - -
$ .1
-
-
9 .3 .2 .3
1.8 1.9 .4 .5 .1 .1 --
.3 .4
As % of SaleBt Division Contribution Gross Profit BARE
$ Sales/9 Investment
-
15.3 17.6
5.3 .60
12.6 16.6
6.0 .76
19.0 22.4
5.3 .84
19.9 24.0
5.3 .62
21.6
25.6 5.3 .65
Selling Price/lb CoBt of Sales/lb
9.065 $.054
.071 .059
.071 .055
.070 ,070 .053 .052
Capacity - MM lbs Excess internal Use Sales
27,0 2.6 .1
24.3
27.0
1.5 .2
25.3
27.0
2.6 .3
24.1
27.0 .9 .3
25.6
27.0
.3 26.7
Improved profitability in 1963 was the result of both lower phosphorus costs and a better market position. Prices will be stable with modest increases predicted over the next few years. This increase in revenue and lower phosphorus costs will be offset by costs Involved in a major expansion foreseen within the next two years,- Until the expanded facilities reach a capacity level equivalent to that now enjoyed the profitability can be expected to fall slightly.
500633456
WATER_PCB-00039748
SAHTOCBLS ($ In Million*)
gross Invent. - Salas Internal Use Total
For Salest % HOI (after tax)
im
l.B $9 1.8
1962
2.0
-
2.0
1963
2.6
-
2.6
im___________ Suduet Ce'tv
2.7 2.7
--
2.7 2.7
6.7 7.9 8.7
8.1 11.2
Sales gross Profit SABS Other Income Division Contribution
As % of Bales) Division Contribution dross Profit BARE
9 8ale*/$ investment
9 1.5 1.7 2.0
* .4 .5 .6 9 *1 .2 .1 *- - * .3 .3 .5
2.5 2.3 .6 .B .1 .2 -*
.5 .6
17.1 25.5
8.4 .82
20.0 2S.7
8.9 .82
23.7 29.7
6.3 .76
18.2
24.8 6.7 .92
27.0 33.5
6.8 .86
Selling Prlce/lb Cost of Salee/lb
$.654 .644 .644 $.487 .439 .453
.638 .657 .494 .437
Capacity - MM Ibe Excess Internal Use Bales
3.5 3.5 3.4
1.2 .8 .3 .1 -
2.3 2.6 3.1
3.5 (.3) -
3.8
3.5 -
3.5
The Silica chemical* Bantocel* and Byton are manufactured at Everett by a process which ie common for all product* in the first two atep*. Becauea of thie, their profitability ehould be looked at together to avoid inconeiatenoiea due to the allocation of cost* and investment.
Domestic Bantocel sales reached a peak in 1937 and declined to 1961. The original cryogenic insulator Bantocel A ha* all but disappeared due to low cost competition. The other grades have bean under quality competitive pressure*, For this reason two new grades, 62 and Z, were introduced in 1963 and accounted for much of the volume increase that has current sales at capacity.
A project for $260,000 new capital in 1964 for silica chemical ex pansion has just been approved. This project ie the first and largest in a five year expansion program.
-51 0633457
SMP (9 in Milliona)
. - - 1964 1961 1962 122 budget Cap*tv
dross Invest. - Sales Internal use
Total
$ 9.8
69 3.8
3.7 3.9 - '-
3.7 3.9
4.0 4.0
_
4.0 4.0
For sales % KOI {after tax)
8.3 8.7 10.8 11.5 10.9
Bales Gross Profit SARE
Other Xnoome Depletion Tax Credit Division contribution
9 3.3 3.2 3.3
9 .7 .7 .9
9 .2 .2 .2
9-
-
9 .1 .1 .1
6 .6 .6 .8
3.4 3.5 1.1 1.1
.2 .2 __
a. .
.9 .9
As X of Sales
Division Contribution Gross Profit SARD 9 Balea/$ Investment
17.4 19.8
5.3 .85
19.1 23.1
6.0 .85
23.8 27.0
5.3 .86
26,9
31.0 5.3 .85
25.9 29.9
5.3 .85
Selling Price/lb Cost of Sales/lb
9.083 9.067
.081 .062
.081 .059
.081 .081 .0S6 .057
Capacity - MM lbs Excess Internal use sales
44.6
4.4 1.0 39.2
44.5 3.9
1.3 39.3
45.2 2.8 1.3
41.1
44.5 1.8 1.2
41.5
44.5
.
1.2 43.3
Aa in tha other phosphata products, 196} profitability wae up bacauta
of lower phosphorus costa. Only minor capital expenditures are
anticipated in this department for the next four to five yearsr there
fore, anticipated reduction of phosphorue costs should continue to
improve the profitability of SMP.
'
-520635456
WATER PCB-00039750
STEROX - PH8HOL BASE ($ in Millions)
Gross Invest. - Sales Internal Use Total
ftfifegal________ 1961 1962 im.
4.2
99 4.2
3.5 . 3.7 --
3.5 3.7
____ 1964 Cap'ty
3.5 3.9 -*
3.5 3.9
For Salesi S SOI (after tax)
1.4 3.1 7.0
4.4 10.0
Sales Oross Profit SARB Other Income
Division Contribution
9 3.3 4.0 3.0
9 .4
.5 1.0
9 .3 .3 .4
$ - - -e
$ .1 .2 .6
4.1 7.2 .6 1.4 .3 .6
--
.3 .0
As * of Salesi ' Division Contribution
arose Profit BARS ' $ Sales/9 Investment
3.7 11.0
7.3 .79
5.0 13.5
7.7 1.12
15.0 25.3
9.6 1.03
7.7 15.5
7.9 1.18
11,2
19.0 7.8
1.06
Selling Price/lb Cost of Snles/lb
9.165 .143 .145 $.147 .124 .108
.138 .130 .116 .112
Capacity - MM lbs Excess Internal Use Sales
40.7 20.8
7.0 20,1
54.1 19.1
7.3 27.7
57.4 21.5
9.7 26.2
60.1 21.9
8.3 29,9
60.1
-
B.3 51.B
Phenol based sterox prices were cut by Monsanto in 1961 at the tarn* tint* large volume contracts wars obtained. The market price has remained constant since that time. Change in net prices is dus to product mix and to ths amount of freight which is absorbed from the two producing points. The estimated 1964 net price reduction and cost increase have not materialised and are not now expected. The
first two months of 1964 are actually better than 1963 in all respects.
The major problem for the future is to supply biodegradable steroxes. A satisfactory product has been supplied Lever for use in "all*. Full production will depend upon the timing desired by the customers and the availability of raw materials.
Future return on investment should be in the 7 - 9?t range.
-53-
0633459
ST? - ALL GRADES (9 In Million*)
iiil hmgfcaiJi___l_l_i__i____a_t_f_dgat-Cap1't9y64
Gross invest. - sale* internal Use Total
9 36.0 99 36.0
43.2 -
43.2
46.6 -
46.6
45.6
-
45.6
46.7
-
46.7
For Sales* % KOI (after tax)
6.1 4.7 6.5
6,9 9.9
Sales Gross Profit
SAAB Other Income Depletion Tax Credit Division Contribution
2S.1
9 4.4 9 1.5 9-
9 .0 9 3.7
31.2 4.9 1.9
-
.6 3.6
35.4 6.7 1.9
-
.7 5.5
36.4 7.6 1.9
-
.4 6.1
45.1 10.8
2.4
-
.6 9.0
As * of Sales* Division Contribution Gross Profit GARB
9 Sales/9 Investment
13.2
15.5 5.3 .78
11.6 15.5
6.0 .72
15.6 18.8
5.3 .76
16.8 20.8
5.3 .SO
20.0 24.0
5.3 .97
Selling Prloe/lb Cost of salesAb
9 .070 .068 .06B 9 .059 .058 .055
.068 .068 .054 .052
Capacity KM lb* Excess Internal Use Sales
498,0 55,6 38.9
403.5
592.1 97.6 36.9
457.6
698.0 128.3
48.2 521.5
704.0 127.3
41.2 535.5
704.0
-
41.2 662,8
The factor ceeponeible Tor the improvement in ST? profits in 1963 has been the reduction in elemental phosphorus manufacturing costs. At year-end 1963, a competitor out the price of ST? by 259 cwt. if this price cut had been effective on January 1, 1963, return on investment would have been 5.i% rather than 6.8K. However, in general, the sales prioe of ST? for the future is considered stable, with some possibility of upward price adjustments to offset raw material price increases. It is anticipated that the profitability of STP will climb to above 7% within the next three years due to increased volume of sales and anticipated further reductions in phosphorus manufacturing costs.
0633460 -34-
WATER_PCB-00039752
SULFURIC ACID ($ In Millions)
Cross Invest. - Salaa
Internal Use Total
______ Actual_______
1964
Jt2l iSM. ASM iH*JS Cap' tv
9 6.2
9 3.1 $ 9.3
S.3 7.0 3.3 3.1 8.6 10.1
6.7 7.1 2.9 2.9 9.6 10.0
For sale*a X ROI (after tax}
Sales Gross Profit 8ARE Other Income
ivislon Contribution
6.7 7.9 8.4 10.0 10.8
$ 4.7 4.5 4.6
9 1.3 1.3 1.5
9 .4 .4 .3
$
$ .9
.9 1.2
5.0 5.3 1.7 1.9
.3 .3
1.4 1.6
As X of Salesi Divieion Contribution cross Profit BARE
9 Sales/9 Investment
18.5 26.9
8.4 .76
19.4 28.1
8.9 .85
26.6
32.5 6.3 .66
27.8 33.3
5.7 .75
30.0 35.5
5.7 .75
Selling PriceAb Coet Of Sales/lb
$ .010 .009 .009 9 .007 .007 .006
.009 .009 .006 .006
ipacity - MM lba Excess
Internal Use Sales
937.2 26.7
416.6 493.9
937.2 38.7
412.0 486,5
943.2 42.7
396.7 503.8
943.5 943.5 (21.7) (57.0) 418.2 418.2 547.0 582.3
Sulfurlo acid la produced at Everett, Krumttrich and Avon (a joint venture with Tidewater). Over half of the sulfuric manufactured is used captively by Monsanto and Tidewater. Because of the contractual relations with Tidewater their use is not included in "Internal Use".
Sulfuric's profitability cycles with the business cycle but, in addition, Monsanto's business has been affected by some major changes, For example, in 1961 Alcoa decided to shut down its 6t. Louis area operation, thus making 35,000 tons of acid available. Barge shipments and selling in the Chicago market helped eliminate this surplus, in 1963 the shutdown of Phenol at Avon made available 26,000 tons. These have only partially been sold.
The market price of virgin sulfuric acid has been constant aince 1954. Tha net prices and unit costa are affected by the volume of spent acid included in the sales. In 1963 the amount of spent from Avon waa more than double the 1962 quantity. This wae made available because of the reduced manufacturing volume. Sulfuric is expected to continue at an B - 10X after tax return on investment.
WATER PCB-00039753
BYTOW - MERTOHS ($ in Million*)
dross Invest. - Sales Internal Use Total
Actual im im 1963
9 1.1 99 1.1
1.5 -'
1.5
1.7 -
1.7
- 1964 Budget Cap'tv
1.7 1.7 --
1.7 1.7
For salesi 91 KOI (after tax)
11.7 6.6 11.1 12.7 17.0
Sales Oross Profit SAKE Other Income Division Contribution
9 1.2 1.1 1.2
9 .4 .3 .5 9 .1 .1 .1 9- 9 .3 .2 .4
1.3 1.6 .5 .7 - .1 --
.5 .6
Ab 91 of Bales i Division contribution Ores* profit SAKS
$ Sales/9 investment
23.3 31.1
8.4 1.05
19.0 27.6
8.8 .73
33.4 39.3
6.3 .69
34.8 40.3
5.7 .76
39.6 45.1
5.7 .89
Selling Price/lb Cost of 8ale*/lb
9.162 9.111
.162 .117
.163 .099
.178 .178 .106 .097
Capacity - MM lbs Excess Internal Use Bala*
7.9 9.7 9,6 .5 2.9 2.2 -*-
7.4 6,8 7.4
8.8 8.8 1.5
--
7.3 8.8
The Silica chemical* flyton,-Merton* and Santocel are manufactured at Bverett by a proce** which i* common for all product* in the first two processing step*. Because of this, their profitability should be looked at together to avoid inconsistencies due to the allocation Of cost* and investment.
Syton has been highly profitable. Its growth with few exceptions has been steadily increasing. The original product was a 1591 silica which has been completely replaced by a 3091 product, in 1963 4091 Syton was introduced and in 1964 it is contemplated that 5091 Syton facilities will be Installed. The higher concentration* result in freight, packing and shipping savingB.
-560633462
TSF CRYSTAL ($ in Millions)
Actual 1961 1962
-- W4 Budget cap'tv
gross Invest. - Sales Internal use Total
4 2.7 2.7 2,7
9- - $ 2.7 2.7 2.7
3,0 3.0
3.0 3.0
For salesi X KOI (after tax)
li. e 11.0 13.0 14.7 16.8
Sales Qross Profit BARE Other Income Depletion Tax Credit Division contribution
4 2.9 2.9 2.6
4 -7 .7 .8
4 .2 .2 .1 4 - - >$ .1 .1 -
4 .6 .6 .7
3.2 3.5 1.1 1.2
.2 .2
-.
--
.9 1.0
As % of Salest Division Contribution gross Profit SAAB
6 Sales/4 Investment
20.9 24.3
5.3 1.07
20.5 25.3
6.0 1.05
27.2 31.3
5.2 .95
27.9 32.5
5.3 1.07
29.7 34.3
5.3 1.15
Selling Frice/lb Cost of Sales/lb
4.041 4.031
.040 .030
.040 .027
.041 .041 .028 .027
Capacity - MM lbs Excess Internal Use Salas
72.0 1.2
-
70.8
75.0 2.8
-
72.2
84.0 18.3
-
65.7
84.0 6.8
-
77.2
84.0 -a
-
84.0
As in the other phosphate products, 1963 profitability was up becauss of lower phosphorus costs. The lower sales volume of TSF crystal in 1963 was entirely due -to the Climalene account problem- This will extend into 1964 with the result that budget will not be met. Future growth for this product is predicted at a modest 2%.
Only minor capital expenditures are anticipated in this department for the next four to five yearsj therefore, anticipated reduction of phosphorus ooste should continue to improve the profitability of TSF crystal.
57- 0633463
TSPP ($ in Millions)
Actual
1964
1961 1962 1963 ladSSfc CAP'tv
Gross invest. - sales
Internal Use Total
9 4.9 4.B 5.1 9 - 9 4.9 4.8 5.1
5.0 5.2 e. -
5,0 5.2
For Salem X SOI (after tax)
6.3 6.9 9.3
8.4 11.3
Sales gross Profit SAKE Other Income depletion Tax Credit
Division contribution
9 4.6 4.6 4.8
9 .6
.8 1.0
9 .2 .3 .2 9- -
9 .1 .1 .1
9 .5 .6 .9
4.7 6.0 1.0 1.4
.3 .3 -
.1 .1 .8 1.2
As X of Salem Division Contribution gross Profit SAAB
$ Salas/f investment
10.9 13.4
5.3 .94
12.9 16.6
6,0 .93
18.2 21.3
5.3 .95
17.5 21.5
5.3 .92
19.0 23.0
5.3 1.15
Selling Prlca/lb Cost of Salee/lb
9 .063 9 .057
.062 .052
.062 .048
.062 .062 .049 .048
Capacity - MM lbs Excess Internal Use Sales
122.4 48.4 4.1
69.9
109,7 33.1 2.9 73.7
100.0 18.0 3.2
78.8
100.0 21.9 3.1 75.0
100.0
3.1 96.9
Sals* are forecast to remain relatively constant for the next faw
yaara with a alight growth possible. Therefore, with a firm price
position, the profitability will be primarily a function of raw
material cost.
bower phosphorus costa should continue to rales the profitability of TSPP.
-580633464
WATER PCB-00039756
VANADIUM CATALYST (9 in Millions)
gross invest. - Bales Internal use Total
Actual_______ mi 1962 1963
6 .9 1.1 1.5 9- * 9 .9 1.1 1.3
1964 udge Cap'tV
1.4 1.3 --
1.4 1.3
For Balest % KOI (after tax) '
30.8 41.9 16.4 IS.3 26.7
sales Gross Profit SAEUS Other Income Division Contribution
9 1.0 1.4 1.2
9 .5 .9 .6
6 .1 .2 .1
6 .2
.3 -
t .6 1.0
.5
1.3 .7
.1
(-1) .5
1.8 1.1
.2
(.1) .8
As X of Salest Division Contribution gross Profit BARB
9 Bales/9 Investment
61.1 33,0 11.8 1.05
69.3 62.1 10.4 1.26
44.7 49.0
6.3 .76
34.7 33.0
9.4 .92
44.3 61.3
9.3 1.26
Selling Price/ltr Cost of Sales/ltr
91.74 1.68 1.60 9.836 .637 .817
1.63 1.62 .732 .626
Capacity - MM Itr Excess Internal Use Sales
1.1 1.1 1.1 .3 .3 .4 -*-
.6 .8 .7
1.1 1.1 .3 s- -
.8 1.1
The sales of Vanadium Catalyst depends upon tha sale of new sulfuric acid plants and tha amount of replacement catalyst. Both of these operations are dependent primarily upon the total new capital being spent on sulfuric acid plants. This, in turn, is dependent upon the business cycle and in recent years the fluctuations in this business lags tha business cycle by About twelve months, m addition, we must successfully bid on the available business for which there has been increassd competition in recent years. Low manufacturing volume accounted for high 1963 coete.
-59-
0633465
ORGANIC DIVISION
Division profitability has bean (fMM's)
1961
Actual__________
1962
1963
1964 Budget
% Return on Investment AT Gross Investment Sales Division Contribution BT Div. Cont. as % of Sales $ Sales/; investment
6,9 208.0 165.7
29.7 17.9
.30
. 6.9 239.6 161.9
34.5 19.0
.76
5.9 254.5 188.4
31.5 16.7
.74
7.9 259.2 202.6
41.1 20.3
.73
In 1963 investment in the divisions' products earned the following rates of returni
Loss 0 to 3% 3 to 5.8% Over 5.3%
% of Total Investment
12.8 11.0 42,8 33.4
Major products reported arai
Adipic Acid Aluminum Sulfate Aroolors & Therminols Aspirin Biphenyl Bisphenol A Caffeine Di Octyl Phthalate Ethavan Fumaric Acid H Acid Maleic Anhydride Mersize RM, TFL, &
Rosin Size KIP Orthonitroaniline Para ttitroanlline
Para Phenetidine(Incl.Tech.) Pentachlorophenol Phenacetin Phenol
Phenoleulfonic Acid 65% Phthalic Anhydride Pydraui A-200
Page 61 Pyranols 62 Saccharin 63 Santicizer 141 64 Santicizer 160 65 Santicizer 409 66 Santocure & Cyclex 67 Santocure NS & Cyclex B 68 Santoflex AW & Ajone E 69 Santoflex DD & Ajone DD 70 Santoflex 36 71 Santolube 203 BSC (Incl. 72 Santolene.p & FC) Santolube 393 73 8antolube 801 74 Santophen 1 75 Santopoid 23 RI & 23 RIA 76 Santowhite Crystals & 77 Santonox (Incl. Santonox R) 78 Skydrol 79 Skydrol 500-A 80 Thiofide 81 3,4,4-Trichlorocarbanilide 32 Vanillin
Page 83 34 , 85 86 07 ee 39 90 91 92
93 94 95 96 97
93 99 100 101 102 103
These comprise 61% of the divisions' investment in 1963.
0633466
-60-
ADIPIC ACID ($ in Millions)
Actual________
1964
1961 1962 1963 u&e gap' tv
Gross Invest. - Sales Internal iUse Total
$ 8.8 $ 1.9 $10.7
10.3 2.8
13.1
7.2 6.1 13.3
7.2 7.3 14.5
7.2 7.3 14.5
For Salesi % RQI (after tax)
Sales Gross Profit SARK Other Income Division Contribution
As % of Salesi Division Contribution Gross Profit SARD
$ Sales/S Investment
11.4
$ 5.6 5 2.5 $ .4 $$ 2.1
12.0
6.1 3.0
.5 .1 2.6
17.2
5.7 3.0
.5 .1 2.6
17.3
5.3 2.9
.4 2.5
18.1
5.3 3.0
.4 2.6
37.6 44.2
7.6 .63
42.3 49.8
8.2
.59
45.6 53.2
8.7 .79
46.9 54.5
8.0 .74
49.1 56.7
8.0 .74
Selling Price/lb Cost of Sales/lb
$.289 $.161
.257 .129
.259 .121
.247 .247 .112 .107
Capacity - MM lbs Excess Internal Use Sales
30.8 7.3 4.2
19.3
34.8 3.8
7.2 23.8
36.9 (8.7) 23.7 21.9
46,3 -
24.9 21.4
46.3 *
24.9 21.4
This product continues to be highly profitable. The Manufacturing Department has done an excellent job of coat reduction, improving yields and quality and increasing capacity. A lower-cost phenol has
also been of major help.
In 1964 the plant will operate at 46 million pounds. Currently it 1b oversold and we are committed to supply chemstrand with 16 million pounds lata in 1964. The integration of manufacturing schedules in
1962, 1963 and 1964 has been most helpful in permitting Chemstrand to
meet their peak demands for nylon. Product quality of the Organic operations also had to be Improved to meet fiber specifications.
The program requires continued Integration with Chemstrand since their daily consumption rate is so high. The forward plan provides for
expansion of capacity by Chemstrand and the Organic Division will be left with surplus capacity in 1965 and 1966 until sales for chemical
applications increase. It is highly probable that sales will exceed budget in 1964 (excluding ChemetrAnd). Although pricing has been firm,
except for food grade quality, erosion is anticipated with the new
production scheduled by Celanese (1966)t the 20 million pound plant of Rohm It Haas began operations in 1963 but start-up troubles kept them from supplying much beyond their own use until late in the year. Organic's process using phenol is closely competitive with even the
large-volume operations of Chemstrand.
6L 0633467
ALUMINUM SULFATE {$ In Million*)
Actual 1961 1962
X
'J + 1964
1251 Budge*. CAP'tY
gross Invest, - Sales Internal Use Total
$ 2.4
$$ 2.4
2.6 2.7
-.-
2.6 2.7
2.6 2.6 -*
2.6 2.6
For Salesi % ROI (after tax)
(4.9) (5.8) (5.1)
(2.7) 1.0
Seles Oross Profit SAAB
Other Income Division Contribution
6 .7 9 (.2)
$ .1
9-
9 (.3)
1.5
(.1) .2 *
(.3)
1.5
(.1) .2 -e
(.3)
1.8 .1 .2
(.1)
1.9 .3 .2
-
.1
As % of Sales t Division Contribution Oross Profit SAAB
$ 8ales/$ Investment
(34.8) (25.2)
9.6 .29
(19.6) (8.4)
11.4 .60
(18.5) (6.5) 12.0 .57
(8.1) 5.2 13.4 .68
2.7 15.3 12,7
.74
Selling Price/lb Coat of Salec/lb
9.017 9.021
.017 .019
.018 .019
.020 .020 .019 .017
Capacity - MM lbe Excess Internal Use Sales
61.2 20.6
-
40.6
122.4 34.0
-
88.4
108.0 20.1 -
87.9
98.4 8.4
-
90.0
98.4
-
-
98.4
Profit foil off badly during 1961 - 1963 now producari attempted to establish themealva* in the alum market. One of theea recently diecontlnued alum operation!. A price lncreaae was put in effect in mid-1962 and a second increase in 1963 finally took the price above the 1960 level. This outlet for sulfuric acid is important for Monsanto nines the Inorganic Division could not move the sulfuric acid released if alum were shut down, However, by 1967 it is antici pated working the net investment of this department down to a low enough level to go out of business. This will be done unless profit margins can be improved.
In late 1963 the iron-free alum equipment was shut down and dismantled. This will improve the over-all alum coat performance.
Pricing on alum continues to be critical and further increase in profits will be tried by again raising the price in 1965. Lower-cost bauxite is bsing tested but does not appear promising becauss lower yields offset the lower-cost bauxite.
0633466
-62-
WATER PCB-00039760
AROCLOBfl AND THEBMINOL8 ($ in Million*)
Oros* Invest. - Sales Internal Use Total
tesa&x----------J.961 1962 1963
$ 9.4 5.7 7.1 $ 1.2 1.6 1.6 $ 6.6 7.3 8.7
------- m ffrp'fir
8.4 1.9 10.3
8.4 1.9 10.3
For Sale*! K ROI (after tax)
Sale* Oros* Profit SARE other Income Division Contribution
17.3
$ 5.3 $ 2.S $ .6 $9 1.9
17.8
5.3 2.5
.5 .1 2.1
13.5
5,7 2.7
.7
-
2.0
14.2
6.1 3.1
.6
a.
2.5
15.4
6.2 3.2
.6
-
2.6
As K of Salest Division contribution Gross Profit SARD '
$ 8ales/$ Investment
Selling Price/lb Cost of Sales/lb
36.7 47.0 11.0
.98
$.155 $.082
39.4 47.7
9.4 .94
.154 .080
34.7 46.7 12.5
.81
.153 .082
40.6 51.0 10.4
.73
.154 .075
41.7 52.0 10.3
.74
.154 .074
Capacity - MM lb* Excess Internal Use Sales
55.8 11.8
9.8 34.2
56.4 9.6
12.2 34.6
56.4 7.7
11.4 37.3
53.4 .4
13.1 39.9
53.4 -
13.1 40.3
Thi* i a consolidated group of Aroclor product* cro**ing three
product group llna* and variou* price schedule*. From an overall
appraisal, it can be *tated that the Aroclor family constitute* a
very profitable and large family of product* that are rather widely
diversified in end-use application*.
.
The Aroclorn are expected to continue to grow in volume and retain a favorable profitability status. Flans are currently in progress to install a major expansion in capacity to accommodate growing demand for these product*.
630633469
ASPIRIH (9 in Millions)
gross Invest. - Sales Internal Use Total
For Sales i % ROI (after tax)
Sales gross Profit BARE Other Income Diviaion Contribution
As %'ot Salas t Division Contribution gross Profit SAKE
9 Salas/f Investment
isiaai_______ -1961 im mi
9 5.7
.2 5.9
7.2 7.7 .1 . .1
7.3 7.8
8.1
9 4.4 9 1.2 9 .2 99 i.o
9.9 10.6
5.0
1.8
5.8 2.1
.3 .4 --
1.5 1.7
22.2 28.3
6.4 .76
30.0 36.B
7.1 .69
29.4 36.7
7.8 .75
1-964 Sudaet Cap'tv
7.9 7.9
7.9 7.9
11.2
5.7 2.2
.4
as
1.8
13.1
5.7 2.5
.4
-
2.1
31,0
38.5 8.0 .72
36.1 43.6
8.0 .72
Selling Price/lb Cost of Sales/lb
9.563 .570 .558 9.404 .360 .354
.536 .536 .330 .302
Capaoity MM lbs Exceas Internal Use Sales
10.0 2.1 .2 7.7
10.0 1.2 .1 8.7
10.0 (.5) .1
10.4
10.6
-
10.6
10.6
-
10.6
The growth of aspirin demand was aemewhat unexpected. It raaultad largely from withdrawal of phenacetin from aoma analgaaio compound* and tha substitution of aspirin. For tha paat two year* operation* have been at full capacity and continued operation* are foracait at thi* level with some purchase* in 1964. Incremental expansion* in both salicylic acid and aspirin hava been effected and currently major expansions in both products ara being studied,
Monsanto has a vary strong position in integrated raw materials and technology leading to the economic production of aspirin. Thi* domi nant position i* expected to continue. Pricing of finished aspirin will be affected only slightly by a reduction in tariffs.
-64' 0633470
BIPHEHYL (9 in Millions)
Actual..... 1961 1962 1963
1964 Budget Csp'tv
Gross Invest. - Sales
$ .3 .3 .3
Internal Dee 9 1.5 1.9 2.3
Total
9 1.6 2.2 2.6
.3 .4 2.2 2.2 2.5 2.6
For Sales i % ROT (after tax)
29.4 26.1 29.7
24.6 64.6
Salsa Gross Profit SARS Other Income Division Contribution
As % of Sales i Division. Contribution Gross Profit SAKE
$ Sales/9 Investment
9 .4 .4 .4 $ .2 .2 .2 9- - . 9- - 9 .2 .2 .2
41.6 47.6
6.6 1.47
44.1
SI.7 7.8
1.33
51.3 55.6
4.8 1.21
.3 1.0 .2 .6 - .1 .
.2 .5
30.6 56.6
6.6 .97
55.0 56.7
3.6 2.35
Selling Prlce/lb Cost of Sales/lb
9.154 5.060
.163 .079
.166 .074
.167 .167 .072 .069
Capacity - MM Iba Excess internal Uae sales
27.0 2.3
22.3 2.4
32.4 7.1
22.9 2.4
32,4 5.6
24.S 2.3
32.4 3.7
26.7 2.0
32.4
26.7 5.7
Biphenyl it manufactured primarily for upgrading to Aroclore. a stable Biphenyl market for about 2 million pound* ha* existed for many yeare and will probably continue at this level. Monsanto's position will be threatened in this 2 million pound market by by product Biphenyl available from two sources - Schenectady Chemical phenol by-product and the hydrodealkylation residues containing above 50# Biphenyl. If one or more of these parties upgrades crude Biphenyl to satisfactory quality, about 600,000 pounds of Monsanto business will be lost. Price reduction by Monsanto will not materi ally affect the placement of this by-product material.
-65 0633471
BISPHEHOL A (? in Millions)
arose Invest. - Seles Internal Use Total
For Sales i % RQI (after tax)
Actual_______ 1261 1962 1963 3 3.4 4.6 4.6 3 .1 .1 .1 3 3.5 4,7 4.7
2.7 6.8 8.7
1964
BsSaSli -Cap` tv
5.4 5.4 .2 .2
5.6 5.6
10.7 11.0
Sals* Orosa profit BARE Other Income Division Contribution
3 2.1 2.6 3.3
3 .3
.9 1.1
3 .1 .2 .3
3- - -
3 .2 .7 .8
3.4 3.4 1.4 1.5
.3 .3
1.1 1.2
As K of Selesi
Division Contribution Gross Profit SARB 3 Salee/3 Investment
9.1 16.4
7.7
.61
24.8 32.7
8.4 .57
25.6 33.6
8.7 .71
34.0 41.7
8.0
.63
34.9 42.S
8.0 .63
Selling Price/lb Cost ofSeles/lb
3.247 3.207
.256 .172
.224 .149
.230 .230 .134 .132
Capacity - MM lbs Excess
Internal Use Sale*
* 13.5 13.6 - 3.1 (1.4) .3 .2 .4 8.4 10.2 14.6
15.4 .1 .5
14.8
15.4
-
.5 14.9
* Product made in multiple purpose equipment which oauaea a fluctu ating capacity to exist.
Costs of Bisphenol A improved as the plant attained full capacity operation in 1963. The unit is sold out for 1964 and production is being supplemented by conversion of Monsanto phenol for resale. Pricing of Bisphenol A has been relatively firm, in spite of major breaks in phenol pricing, but pressure is expected In 1964 and 1965. The major outlet continues to be for epoxy resins, nils unit is not able to make the quality required for polycarbonate resins. A plan to Install such a unit has been deferred indefinitely.
Costs will be helped by improvements in phenol and acetone with a higher percentage of phenol produced at the cumene phenol unit of Chocolate Bayou. An expansion of about 3 million pounds to a total of 18 million pounds of epoxy-grade BPA is now under conaiderstion for somewhat limited capital.
Adequate capacity exists in the USA for total requirements of both epoxy end polycarbonate quality, the 1963 production of epoxy resins was a new record -- 30J4 over the 1962 level. The epoxy resins ara produced under a limited number of licensee against major patent* which expire beginning in 1966. Some degradation in pricing can occur at that time.
0633472
CAPFEIKB ($ in Millions)
Gross Invest, - Sales Internal Ose Total
Actual_______ 1961 1962 1963
$ 4.3 4.4 4.1 $- - $ 4.3 4.4 4.1
196^ Gsslj&x.
3.6 3.7
-
3.6 3.7
For Salesi S ROI (after tax)
(1.8) (1.0) (1.6)
(2.9) 3.9
Sales Gross Profit SAKE Other Income
Division Contribution
1.2 (.1) $ .1 ($ (.2)
1.2
-
.1
-
( .1)
1.4
-
.1
as
(.1)
1.1 (.1)
.1
-
(.2)
2.0 .4 .1
-
.3
As S of Salesi Division contribution Gross Profit SAKE
$ Salea/f Investment
(13.2) (6.7) 6.4 .29
(7.0)
(.7) 7.1 .27
(9.3) (1.3) 7.0
.35
(19.0) (10.9)
0.0 .31
10.2 14.7
4.6 .76
Selling Price/lb Coat of Sales/lb
$2.24 2.35 2.18 $2.39 2.37 2.21
2.19 2.19 2.43 1,87
Capacity - MIA lbs
Excess
.
Internal Ose
Sales
1.2 1.2 1.3 .7 .7 .6 --
.5 .5 .7
1.3 1.3 .8 --
.5 1.3
Caffeine profitability by normal standards will navar ba satisfactory. It is expected that within a year or two Monsanto will withdraw from tho oaffaina markat unlaaa some unexpected opportunity occurs to improve the margin. Foreign producers are selling below cost to the 08 markat and at least one of them is in danger'of bankruptcy. Monsanto no longer has a fully integrated position in caffeine and purchases its raw material from Oarmany. Thera will be little loss in capital or profits whan Monsanto withdraws from this product.
-67 0633473
PI OCTYL PHTHALATB ($ in Millions)
Gross Invsst. - Bales Internal Use Total
Acta&i_______ 1961 1962 iM
$ 2.1
6 .8 $ 2.9
3.3 5.9 .6 .8
5.9 6.7
. 1964 Budget Cap'ty
6.9 7.1 .6 .6
7.5 7.7
For 6alai X R0I (after tax)
(3.5) (5.7) (6.8)
(1.0) 1.4
Sales Grose Profit G&RJS Other Income Division Contribution
As X of Salssi Division Contribution Gross Profit SAR0
$ Sales/$ Investmont
$ 1.9 $ (.1) $ .2 $$ (.3)
4.1 (.4)
.2
(.6)
4.0 (.6)
.2
(.8)
(12.7) (4.5) 8.2 .91
(15.3) (9.6) 5.7 .77
(20.9) (15.0)
5.9 .67
4.6 .2 .3 -
(.1)
7.0 .6 ,4 _
.2
(2.9) 3.3 6.2 .68
2.8 7.9 5.1 .99
Selling Price/lb Coat of Salei/lb
Capacity - MM lbs Excess Internal Use Sales
$.220 $.230
ft v 2.3 11.2
.168 . 1B4
ft 2.8 24.2
.142 .163
ft 3.6 28.0
.152 .147
49.1 15.8
2.7 30.6
.152 .140
49.1
2.7 46.4
* Product made in multiple purpose equipment which oauiea e fluctuating capacity to exist.
Price competition in 1962 and 1963 was the most stringent during the history of plasticizers. Nevertheless it appeared to bottom-out at 144 per pound and a' price rise to 164 per pound was made effective October 1. 1963. It ia expected to hold at this level in 1964.
Costs have been improved by a conversion arrangement on oxo alcohols. The Intermediate, phthalic anhydride, has benefited from lower naphth alene prices. Fundamentally we have the lowest-cost naphthalene In the USA and the Delaware River phthalic anhydride plant is the most efficient in the industry. At present phthalate plasticizers are oversold with one exception -- the unit at Long Beach.
DOP is producing income via trade-outs in other products which is not credited to DOP. These tradee produce income for the division which is iiqpossible to obtain in any other way and in 1964 will amount to $300,000.
A further price increase of at least one cent per pound is anticipated in 1965. with continued efforts to improve costs of rew materials we hould chow an Improved Income in DOP.
-68-
0633474
EffgfflftM
<$ In Million*)
Actual A8S1 1962 1963
_ 1964 Buduet Cao'tv
dross Invest. - Sales
8 2.0 2.3 2.5
Internal Use * -
- '-
Total
$ 2.0 2.3 2.5
. .2.6 2.6
2.6 2.6
Por Salesi % ROI (after tax)
13.8 14.0 12.8
13.7 13.9
Sales dross Profit SARK
Other Income Division Contribution
$ 1.6 1.9 1.9
8 .7 .8 .8
$ .1 .1 .1 $- - -
.6 .7 .7
2.1 2.1 .9 .9
-.2 .2
-
.7 .7
As S of Buiesi Division Contribution dross Profit SARK
$ Sales/? Investment
35.9 41.8
6.4 .SO
35.9 42.6
7.1 .82
34.9 42.1
7.S .77
33.3 40.8
8.0 .82
33.6 41.1
8.0 .82
Selling Price/lb Cost of 8l*s/lb
$6.23 6.24 6.10 $3,62 3.58 3.53
6.24 6.24 3.70 3.67
Capacity - MM lbs Excess Internal tls* Sales
.3 .3 .3 -----
.3 .3 .3
.3 .3 ---
.3 .3
Monsanto supplies th* ntlr U8 market of Sthavam result, an axeell*nt margin and SOI. Pull integration of raw material* maka* our position strong. Frequently other producere threaten to enter this market hut so far none have found th* means.
The threat to this business rest* with a reduction in tariff, which is now at 70 plus 45X of th* VS selling price. Monsanto will still dominate this market but at a lower price and margin if tariff* are reduced.
69 06334 ?S
WATER PCB-00039767
FUMARIC ACID ($ in Million*)
Cross Invest. - Sales Internal Use Total
for Sales t K KOI (after tax)
Actual _
1961 im 1963
9 3.0 3.6 4.0 $ .3 .6 .5 9 3.3 4.2 4.5
(1.6) (1.5) (2.0)
_, 1964 Judost cp'tv
4.2 4.2 .4 .4
4.6 4.6
.7 1.3
Salsa Cross Trotit SARB Other Income Division Contribution
Ae % of Sales i Division Contribution Cross Profit SARB
$ Salee/9 Investment
9 1.3
$9 .1 9S( .1)
1.3 -
.1 -
( .1)
1.4 ( .1)
.1 am
( .2)
1.9 1.9 .2 .3 .1 .2
.1 .1
(7.3) .5
7.7 .45
(6.7) < .5) a.2
.37
(12.2)
< 3.6) 6,6 .34
3.2 U.l
8.0 .45
5.8 13.7
8.0 .45
Selling Price/lb Cost of Sales/lb
9.221 9.220
.197 .198
.162 .167
.175 .156
.175 .151
Capacity - MM lbs Excese Internal Use Sales
13.2 6.5 .7 6.0
13.2 5.2 1.3 6.7
11.8 2.2 1.1 8.5
12.0 -
1.3 10.7
12.0 *
1.3 10.7
The price degradation afflicting maleic anhydride al*o attacked
fumaric acid. The price decline was beyond reason a* maleic anhydride
producers jumped into fumaric acid as a way of moving product, in
addition, a new production unit was established by a competitive food
acid manufacturer (pfleer) to supplement the traditional citric acid.
Costs have been high due to volume variance carried over from maleic
anhydride.
'
The price increase of January 1, 1964 has not been fully successful and additional efforts will be made in the future to increase prices to a raasonabla level -- target, 249 per pound by 196B, Research and Development have been promoting new markets for fumaric acid as foodgrade and cold-water soluble products. The potential volume of these
usee, plus normal growth for resin applications, will oversell this unit in 1965 end new capital will be required. Justification ia dif ficult In the face of 1963 losses, but long term, the product should
bs acceptsble. 'Cold-water-soluble fumaric acid alone could add 10 million pounds to sales.
-700633476
H AC10 (# in Million*)
Oroaa Invent. - Sale* Internal l)*e Total
ror 5aleat ft HOI {after tax)
Salea Groan Profit SAH8 Other Income bivialon Contribution
Aa K of sle*t Divlaion Contribution Groaa profit SAAB
# Salea/# Inveatment
Actual
1961 mi mi
# 1.9 1.9 2.1
#-
- '-
* 1.9 1.9 2.1
9.0
# 1.6 # .3 $ .1 $$ .4
10.0
1.6 .5 .1 .4
7.6
1.7 .4 .1 e .3
23.3
29.0 6.9 .83
24.4 32.1
7.9 .65
20.0 24.5
4.7 .79
1964 budget Cap'tv
2.3 2.4 .
2.3 2.4
6.0 12.2
1.5 2.1 .4 ;7 .1 .1 _ .3 .6
19.0 25.4
6.6 .63
27.5 32.7
3.3 .68
Selling Prlco/lb Coat of Snlaa/lb
#.949 #.673
.943 .641
.637 .632
.879 .879 .656 .592
Capacity - MM lba Exceaa Internal Una Sale*
2.4 2.4 2.4 .7 .7 .4 - - .-
1.7 1.7 2.0
2.4 2.4 .7 .*
1.7 2.4
The H-Aoid budget La probably uaderetated Cor the coming yaar due to tha devalopmant of aubatantial ovaraaaa buelneae. Pricing In European market* la vary low but tha tl.S. aalling price la atabla after Monaanto reduced tha price 104 par pound about a year ago.
Longer range, tbi* produot i* aubjeot to aoma of the textile bual naaa vlciaaltuda* such aa prefarenoe in certain colore from aaaeon to aaaaon. Monaanto la tha only H-Acld producer who ia not alao In the dya bualnaaa and 1* therefore the preferred aupplier to tha independent dye producer*. He expect to continue to earn a aatlafaotory HOI and dominate the V.S.A. market.
-71 0633477
MALEIC ANHYDRIDE (9 in Million*}
Actual......................... 1964 1961 1962 1963 Budget Can1tv
Gross Invest. - Sales
Internal Use Total
6 7.2 6 3.8 $11.0
7.3 3.4 10.7
7.3 . 3.6 10.9
7.5 3.6 11.1
7.5 3.6 11.1
For Sales i % ROI (after tax)
3.5 1.9
.2
2.9 4.8
sales Gross Profit BARE Other Income Division Contribution
A* % of Sale*) Division Contribution Gross Profit BARE
$ Bales/9 Investment
9 3.8 3.4 2.9
9 .8 .6 .3
9 .3 .3 .3
9-
-
9 .5 .3 -
13.9 21.0
7.7 .53
8.5 16.7 8.4
.46
1.1 9.6 8.7 .40
3.7 .7 .3
.4
4.3 1.0
.3 .
.7
11.6 19.5
8.0 .49
16.7 23,8
7.3 .57
Selling Price/lb Cost of Sales/lb
9.223 9.176
.170 .142
.134 .121
.143 ,143 .115 .109
Capacity - MM lbs Excess
Internal Use Sales
57.6 29.7 10.8 17.1
48.0 18.0 10.3 19.7
45.1 11.0 12.2 21.9
45.1 4.4
14.9 25,8
45.1 -
14.9 30.2
Competitive pressures through 1962 and 1963 caused major price
reduction and a corresponding decline in earnings. Start-up charge*
at Chocolate Bayou contributed to higher cost* in late 1962 and
early 1963 (re transferred benzene). The introduction of higher
prices at January 1, 1964 has not been completely successful with
bolow-list selling continuing.
.
While we have been able to minimize costs with SO catalyst, certain marginal producers have shut down. Marketing strategy provides for Increased volume a* other high-cost producers discontinue operations, Fumarlc acid products (resin, food and cold-water-soluble grades) and the dialkyl maleates and fumarates are being promoted to increase total volume of maleic anhydride consumed. Continued efforts will be made to obtain higher prices for these products without losing sales volume. By 1966 this program should be successful and income levels for the maleic anhydride product family will be acceptable.
0633476
-72-
MBftSIZB RM. TPL. AMP ROBIH SIZE KIP <9 in Million*)
Gross Invest. - Sales Internal Use Total
ASSJlfil_____
1961 1163. 1111
9 9.2 5.2 6.0 $- - 9 9.2 9.2 6.0
-- >-964
mtefe sszlix.
6.0 6.6 --
6.0 6.6
For Salesi % ROI (after tax)
15.2 17.1 15.4
19.5 29.9
Seles Oros* Profit SABS Other income Division Contribution
$ 6.5 7.3 7.8 $ 2.2 2.7 2.8
$ .6 .8 .9 9- - * 9 1.6 1.9 1.9
8.3 14.8 2.9 5.3
1.1 1.9 - .1
1.8 3.9
As X of Salesi Division Contribution Grose Profit 6ARE `
$ Sales/9 Investment
25.0 34.3
9.6 1.27
25.9 36.9 11.3 1.38
24.9 36.9 12.0 1.29
22.1 34.8 13.4 1.40
26.4 39.8
9.9 2.24
Selling Price/lb Cost of Snle*/lb
Capacity - MM lbs Excess Internal Us* Sales
9.181 9.119
*
36.3
.170 .107
* 42.8
.165 .109
* 47.1
.162 .106
91.6 40.0
as 51.6
.162 .104
91.6 -
91.6
* Product mad* in multiple purpose equipment Which cause* a fluctu ating capacity to axlet.
Higher efficiency product* are critical to thia market. Such a product, Marais* TPL, we* Introduced in 1963 and priced at a premium initially but competitive action eliminated the' premium. Only Kerculei and American Cyanamld have been able to produce the higher-efficiency eice and the bulk of the business ia held by Monsanto and these producer*,
Additional supply of crude tell oil in 1964-1969 will improve costs of tall oil rosin. Aggreueive purchasing is supplementing our own rosin with purchased materiel at advantageous prices. Paste capacity is adequate for several yaara. Research continual in higher-efficiency products from rosin. Although major effort ia elso being directed toward a chemical alee, It will be a specialty material and the rosinbaa ad products will continue although at lower total production than at preaant. The paper induetry continues to expend at an annual growth of 4X and new specialty and high-performanoa papers are expanding at 6-19X par year. In the latter applications, we plan to establish new pecielty chemicals to supplement our existing line.
-13-
' 0633479
ORTHOHITBOAKILIHE (9 In Million#)
Gross Invest. - Sales Internal Use Total
For Salasi % KOI (aftar tax)
Salas Gross Profit BARB Other Income Division Contribution
As S of Salesi Diviulon Contribution Groan Profit BARB
$ Saleii/t Investment
selling Price/lb Coat of Salea/lb
Capacity - MM lbs Sxcasa Internal Use Sales
Astugj,_______ 1961 1962 1963
9 .6 $* .6
.7
..
.7
.6
-
.6
20.7
9 .6 9 .3
9-
99 .3
29.0
.8 .5 .1
.4
13.4
.3 .2
-
.2
30.7 56.9
6.9 .83
9.433 $.193
*
1.3
54.3 61.6
7.9 1.11
36.2 - 40.6
4.7 .77
.446 .170
*
a. .
1.7
.434 .236
*
-
1.1
____ 1964 Budoet Cap'ty
.6 .7 _ .6 .7
22.7
.6 .3 .3
40.7
.9 .6 .1 . .3
51.3 37.6
6.6 .SB
.430 .162
2.1 .6
a.
1.3
60.3 64.9
3.0 1.33
.430 .131
2.1
-
2.1
* Product Md In multiple purpose equipment Which causes a fluctu ating capacity to axlat.
Ho aignifleant tranda appaar to influanca thi# product in the next faw yaara. Tha only ehangaa occurring racantly hava baan tha reantry of Koppar# in tha manufacture of OHA aftar purohaaing tha
product from ua in 1962. In addition to tha resulting reduced volume, 1963 profitability waa further lowered by higher plant costs due to mechanical equipment problems. The margin ia good for this product and tha KOI will remain vary excellent.
0633460
-74-
WATER PCB-00039772
PABA-HITROANILIHE ($ in Millions)
Gross Invest. - Sales Internal Use Total
Actual________
Am mi 1963
$ 4.4 4.1 4.1 $ - - .2 $ 4.4 4.1 4.3
1964 Budget Cap'tv
4.1 4.2 .6 .6
4.7 4.9
For Salesi % SOI (after tax)
Sales Gross Profit SAAB Other Income Division Contribution
As % of Sales* Division Contribution Gross Profit SARE
$ Sales/$ Investment
selling Price/lb Cost of Sales/lb
Capacity - MM Iba Excess Internal Use Salas
S.2 3,7 6.4
6 2.9 2.3 2.3 $ -7 .7 .6 $ .2 .2 .1 $ - n $ .5 .5 .5
16.7 23.4
6.9 .64
$.430 $.330
* 6.6
21.4 29.1
7.9 .53
.430 .305
*
-
5.3
23.7 28.2
4,7 .56
.429 ,309
* -* .3 5.4
6.7 14.6
2.3 3.6 .7 1.4 .1 .2 -> .6 1.2
24.0 30.4
6.6 .56
.423 .296
9.4 3.2
.9 5.4
34.2 39.1
5.0 .86
.425 .259
9.4
-
.8 9.6
* Product made in multiple purpose equipment vAiich causes a fluctu ating capacity to exist.
Although Monsanto is the largest producer and marketer of para-
nitroanillne, it is unlikely that this product can reach desirable
profitability in the foreseeable future.
'
The reduction in the demand for PHA derivatives in gasoline gum
inhibitors has caused idle capacity to exist. The forecast indicates operations will be at 60% of capacity and thera ia little opportunity for Improving this occupancy.
Monsanto has an unusually strong position in its economy for paranitrochlorobenzene derivatives, including PHA, but competitive pressure will not permit raieing PHA prices to support a proper margin. There is little indication of profitability improvement.
750633461
FARA-PHEHETIDIHB (XCt. TECH.) ($ in Millions)
Gross Invest. - Sales Internal use Total
1961
9 1.3 6 5.9 $ 7.2
1963 tofoe.t M>'ty
.9 . 7.1 5.6 S.O 6.9
1.1 1.1 9.7 9.7 6.8 6.8
For sales> X ROI (after tax)
Salas Gross Profit BARB other Income Division contribution
As X of Sales* Division Contribution Gross Profit BARB
( 8ale*/$ Investment
.5
9 .9 9*9$-
(1.3)
.4
-
-
9.3
.6 .2
-
.2
9.6 9.3
.6
.2 .1 -
.1 '
.6 .2
-
.2
2.7 (6.9) 29.2
9.9 1.1 33.9 7.0 7.6 4.7 .39 .40 ,66
23.9 29.9
6.6 .52
36.0 42.4
6.6 .52
Selling Price/lb Cost of Sales/lb
Capacity MM lbs Excess Internal use Sales
9.991 $.499
* 8.7 .9
.547 .540
*
io. e
.7
.597 .370
*
-
9.2 1.1
.550 .386
10.2
-
9.2 1.0
.550 .317
10.2
-
9.2 1.0
* Product mads in multiple purpose equipment Which causes a fluctu ating capacity to exist.
This product is made primarily as an intermediate to phenacetin. Santoflex AW and Santoquin. Sales reported here are incidental and are largely to our subsidiaries in England and Canada for ths earns products mentioned above. Sales earn a modest ROI because of the excess para-phenetidine capacity in tha world, particularly in Germany as a raeult of reatrlotions recently placed on phenacetin i.e.i phenacetin is not produced to as great an extent ae in the past, therefore tha intermediate le eelling at distressed prices. Monsanto is well placed in this chemistry. Which goes back to nltrodhlorobensene and will remain completely competitive in the foreseeable future.
06334B2
-76-
WATER PCB-00039774
PEHTACHLORQPHEHOL (9 in Millions)
Actual 1961 196? 1963
1964 Budget Cap'tv
Cross Invest. - Sales
9 2.3 2.7 2.4
Internal Use 9 .9
.8 1.0
Total
9 3.2 3.5 3.4
2.4 2.4 .9 .9
3.3 3.3
For Salasi X KOI (aftsr tax)
9.6 B.2 6.9
4.8 7.1
Sales Cross Profit SAPS
other Income Division Contribution
9 1.7 1.6 1.7
9 .6 .7 .5
9 .3 .2 .2 9- - 9 .4 .5 .3
1.3 1.6 ,4 .5 .2 .2 -.
.2 .3
As X of Salesi Division Contribution Cross Profit SARK
$ Sales/9 Investment
24.1 33.5
9.6 .74
28.8 39.8 11.3
.59
20.1 31.8 12.0
.72
17.3 30.0 13.4
.56
21.4 33.0 12.1
.66
Selling Prlce/lb Cost of Sslaa/lb
Capacity - MM lbs Excess Internal Use Sales
9.171 $.114
e 5.2 9.8
.169 .102
*
-
3.6 9.4
.161 .109
e 5.6 10.4
.136 .095
16.2 1.9 4.7 9.6
.136 .091
16.2 -
4.7 11.5
* Product mads in multiple purpose equipment vdiich causes a fluctusting capacity to sxiit.
Earnings in 1963 wars reduced slightly bscauss of start-op problems on the psntachlorophanol prilling equipment. However, the new product form has been halpful' in expanding our share of the market. Profita bility drops further in 1964 due to an anticipated drop in selling price. Costs were improved substantially by lower-cost phenol. This trend will continue.
Xn 1963 Wood Treating Chemicals Co. was acquired to provide additional profits and better control of distribution, particularly of formulated pentachlorophenol products. Two new distributors were also added Whereas Wood Treating had previously been our only distributor. This program resulted in greater sales with 1963 well ahead of 1962. Our program encompasses further distributor activity as well as direct industrial sales via Wood Treating we will instigate and develop new formulations for the marketing of penta solutions and dry mixtures.
-77-
0633483
PHENACETIN ($ in Millions)
Actual. 1961 122 1363
1964 Budget Gap'ty
Gross Invest. - Sales Internal Use Total
$ 2.6
$$ 2.6
3.1 2.4
- .-
3.1 2.4
2.3 2.4
--
2.3 2.4
For Salas i * ROI (after tax)
24.6 20.2 16.4
16.6 31.2
Salaa Cross Profit
BARS other income Division Contribution
9 2.8 3.0 1.9
9 l.S 1.5
.9
$ .2 ,2 .1
9- - -
9 1.3 1.3
.8
2.0 3.0 .9 1.7 .1 .2 -.
.8 1.5
As Jt of Sales t Division Contribution Gross Profit SAKE.
$ Sales/? Investment
46.9 52.6
6.4 1.09
43.6 50.3
7.1 .97
42.2 49.3
7.7 .81
38.6 46.0
8.0 .86
49.4 55.0
6.0 1.26
Selling Price/lb Coat of Sales/lb
$.980 .915 .866 .464 .455 .439
.850 .850 .459 .382
Capacity ~ MM lba Excess Internal Use Salas
3.4 3.4 3.5 .6 .1 1.3
---
2.B 3.3 2.2
3.5 3.5 1.2 -
--
2.3 3.5
The ROI and margin on this product continue to bo good. However, ths volume has bsen reduced by about one million pound* per year because of alleged doleterioue effects of over-consumption of phenacetin in some countries. Two of the larger analgesic compounds have withdrawn phenacetin from their formula. Government restrictions may further reduce phenacetin consumption. On the other hand, failure to restrict the product by the government may permit a return to larger volumes.
Price attrition la being felt elowly from imported materiel and any further reduction in tariffe will reflect itself in Monsanto's net selling price. Monsanto dominates the US market for phenacetin and has a atrong position in integrated intermediates, we will continue
to dominate thia market but probably at a somewhat lowar price and volume.
-780633484
BENgii (9 in Millions)
Cross invest. - Sales . Internal Dee Total
Tor Salesi % SOI (after tax)
Actual_______
1964
1961 im 12S1 Budget CSjj'ty
9 8.7
9 25.0 9 33.7
15.9 30.0 45.9
15.1 28.8 43.9
11.1 33.8 44.9
11.1 33.8 44.9
6.7 2.7 .7 3.7 4.2
Sales (1) Cross Profit BARE Other Income Division Contribution
As % of Salesi Division contribution Cross Profit BARS
$ Sales/? Investment
9 5.0 6.3 6.2
9 1.6 1.3
.5
9 .4 .5 .3 9 .1 -
9 1.2 .9 .2
5.1 5.1 1.1 1.2
.3 .3 -.
.8 .9
24.5 13,9 3.7 16.1 18.4
31.4 21.2 8.3 22.5 24.8
6.9 7.9 4.7
6.6 6.6
.57 .40 .43
.46 .46
Selling Price/lb Cost of Seles/lb
9 .159 9 .109
.126 .099
.092 .084
.0B9 .089 .069 .067
Capacity - MMlbs (2) Excess Internal Use Seles (1)
142.5 4.0
107.3 31.2
164.0 (5.5)
119.1 50.4
191,6 (21.9) 146.0 67.5
224.9 -
167.2 57.7
224.9 -
167.2 57.7
(1) included purchased sales (2) Avon annual capacity of 33.6MM lbs included in 1961 and 1962,
excluded in 1963 and 1964 as equipment is inoperative.
Profitability has been reduced during the past three years to a low
in 1963 primarily because of several new producers. Resulting
in domestic delivered price attrition from 17.50 per pound to the
present 11,250 per pound. Costs have been reduced materially over
this period from about 120 per pound to the current forecast of 6.90.
Further improvements will be made in cost so that a below 60 coat can
be predicted.
.
Profitability includes by-products as these sales have been credited
to the cost of phenol.
During the next 12 to 18 months there will be some price activity,
probably resulting in a short-range reduction of another 3/4 to 10
per pound. Basically Monsanto la atrong in the production of phenol
having the largest single, one-line cumene phenol plant in tha world
and probably, therefore, the lowest unit coata. Our improved
ulfonation phenol plant at WOK la not far bahind in over-all economy.
Nevertheless, sales of phenol will probably show no better than 4 - 6*
BOX after tax for the next two or three years.
79- 0633485
PHEHOLSULE-OHIC ACID 65 ($ in Million*)
Actual
1964
1961 1962 1963 fla&Bl cap'tv
Oroa* Invsst. - Bale* Internal Vs* Total
$ .6
$$ .6
.7 .7
- .-
.7 .7
.9 1.1
--
.9 1.1
For Sales W KOI (after tax)
25. B 16.9 20.7 16.4 78.7
Bale* Oroaa profit SAIUi Other Income Division Contribution
5 .7 .6 .6
9 .4 .3 .3
8 .1 8-
-
*
-
-
8 .3 .3 .3
.6 2.8 .3 1.8 - .1
--
.3 1.7
AS it of Bales) Division Contribution Gross Profit SAKE
$ Sales/$ Investment
44,6 50.8
6.8 1.21
44.3 52.0
8.0 .79
46.6 50.9
4.6 .92
48.2 54.4
6.6 .68
60.9 64.0
3.2 2.58
Selling Pric*/lb Cost of Salae/lb
$.217 $.107
.200 .096
.183 .090
.178 .178 .OBI .064
Capacity - MMlba Excess Internal. Use Sales
19.0 IS.8
-
3.2
19.0 16.0
-
3.0
IS.6 12.3
-
3.3
15.5 12.2
-
3.3
15.5 -
-
15.5
Thi* product, along with it* companion product, Dihydroxy Diphanyl Sulfona, earned very excellent margin*. Monaanto 1* dominant in theae two product* primarily for the treatment of *t**l plate. We have excellent relation* with *te*l companies and expect to continue approximately a* in the past.
Exce** capacity ia a conaiderable portion of capacityt but the type of equipment required in the proceaa makes thi* inevitable at current realistic demand.
-800633486
WATER PCB-00039778
mawomitwiPB ($ in Million*)
Actual
1964
1961 1962 1963 frudvet Cap'ty
Gross Invest. - Sale* Internal U*e Total
9 18.8 9 8.S 9 27.3
11.1 1S.0 26.1
13.3 16.7 30.0
13.1 16.1
29.2
13.5 16.1 29.6
For Salesi 31 ROI (after tax)
(.3) (2.6) (6.0)
(.5) 3.3
Sales
arc** Profit SARB Other Income Division contribution
9 6.8 $ .4 $ .5 9-
* (.1)
5.3 (.2)
.4 -
(.6)
3.8 (1.3)
.3
-
(1.6)
4.4 .2 .3
-
(.1)
8.4 1.4
.5
-
.9
As X of Salesi Division Contribution gross profit BARE
$ Sales/S Investment
(1.5) 6.0 7.7
.36
(11.4)
(3.1) 8.3 .48
(43.4) (34.7)
8.7 .29
(3.0) 4.9 8.0 .34
10.6 16.1
5.5 .63
Belling Price/lb Cost of Sales/ljb
9 .172 9 .161
.137 .141
.091 .123
.106 .106 .101 .089
Capacity - MMlb* Excess Internal use Sale*
118.9 50.5 29.1 39.3
162.3 69.5 54.3 38.5
163.2 62.7 58.8 41.7
144.0 37.7 64.7 41.6
144.0
64.7 79.3
Another victim of tha price war* of 1962 and 1963, phthallc anhydride bottomed out and a 39 price increase wa* eatabliahed October 1, 1963, The change did not benefit immediately becauee of carry-over commit ment* and Inventory building at the old price*. This increaee, however, will benefit thi* product substantially in 1964. During 1963 marginal facilities were taken out of operation, including 30 million pound* of capacity at the J, F. Queeny plant, Tha Delaware River plant
exceeded design capacity and cost and ha* proven to be an excellent investment, Thi* unit now ha* a demonstrated capacity of 65 million pounds per year and with 49 petroleum naphthalene will have a bulX cost of 6.59 per pound.
The units at J. F, Queeny and Everett are being studied to establish a program for capital improvement, and it appear* likely that major new capital and retirement of much of the older facilities will be required to obtain the most economic solution. Our over-all objective ie to reduce phthallc anhydride cost to 79 per pound or less. The operation of chocolate Bayou for both naphthalene and ortho-xylene is being integrated into an over-all program for phthallc raw material*.
81
0633487
PYPKAUL ft-200 (3 in HillIona)
Oroaa Inveat. - Salea internal ote Total
_ Actual 19^1, 1962 1963
* .5 6 .5
.9 .7 - .-
.9 .7
1964 Baiaftt Cap' tv
.9 1.0
-.
.9 1.0
For Saleai % ROI (after tax)
11.3 18.2 18.7 18.5 36.1
Salea
Oroaa Profit SAMS Other ineome Divlaion Contribution
f .6 .9 .7 6 .2 .5 .4 6 .1 .2 .1 9- - .1 .3 .3
.8 1.5 .3 .9 .1 .2
-_
.4 .7
Aa of Salea i
Divieion Contribution Oroaa Profit SAAB $ Salea/6 Inveatment
22.9 47.1 24.2 1.03
40.4 58.0 17.6
.94
38.4 53.4 17.0 1.02
42.6 56.7 14.1
.91
46.7 58.8 12.2 1.55
Selling Price/lb Coat of Salea/lb
Capacity - HMlbe Exceae Internal Uee Salea
f .223 S.11S
2.5
.222 .093
* 3.9
.221 .099
* -
-
3.3
.223 .096
6.9 3.1
-
3.8
.223 .092
6.9
-
6.9
Product niid* in multlpla purpose equipment which causae * fluctuating capacity to axiat.
Pydraul A-200 ia a low-coat hydraulic fluid developed aavaral yaara ago to expand our volume in the induatrlal fluid market. It haa ehown favorable growth and profitability to date but- the growth curve ia expected to level off unleaa Pydraul F-9 cuatomere are converted to A-200.
Ae thie product ia a blend of proprietary componenta, ita coat and aelllng price ehould remain relatively atable for the predictable future.
-820633488
WATER PCB-00039780
(8 in Millions)
Oross Invest, - Bales Internal Use Total
For Salesi * ROI (after tax)
Sales Oross Profit BARE Other Income Division Contribution
As % of Salesi Division Contribution Oross profit SAAB
8 Gales/j) Investment
Actual________ 1961 1962 1961
8 1.5 1.4 1.4
9-
- .-
8 1.5 1.4 1.4
12.5
$ 1.7 8 .6 8 .2 99 .4
13.7
1.7 .6 .2
.4
9.2
1,6 .6 .3 .3
22.8 33.9 11.1 1.14
24.4 36.4
12.1 1.17
16. B 35.2 18.4 1.15
1964 Budoet SaP-'tY
1,7 2.1 .. .
1.7 2.1
11.1
1.8 .7 .3
.4
40.3
5.1 2.0
.3
1.7
21.9 36.0 14.1 1.05
32.5 39.1
6.5 2.49
Selling Price/lb Cost of Snles/lb
Capacity - KMlbs Excess Internal Use Sales
8.158 9.105
37.9 27.1
10.7
.160 .102
* 10.5
.158 .102
* 10.2
.156 .100
32.9 21.1
11.7
.156 .095
32.8 -
32.8
Product mads in multiple purposa equipment which causes a fluctuating capacity to exist,
Growth in Fyranol sales is directly related to the growth of electrical Installations requiring these transformer fluids. Selling prices and costs have been relatively constant with profitability dependant upon sales volume.
Cooperative programs under way with OS and Meetinghouse are directed toward substantially increasing the Pyranol content of the transformer fluids, Results of the studies are expected to be favorable and an increased volume of sales and greater total profits are anticipated in future years.
In 1963, higher EARS expenses resulted in a drop in profitability vrtiibh is essentially restored in 1964.
830633489
SAqCEARiU (9 in Million*)
gross invest. - sales Internal Use Total
For Sales i % POX (after tax)
Sales gross Profit SABS Other income Division Contribution
Actual 1H 122
$ 2.3
*$ 2.3
2.2 3.3 - --
2.2 3,3
1964 la^ast cap'ty
3.8 3.6 *-
3.8 3.6
S.l
9 2.0 9 .5 9 .1 99 .4
11.9
2.0 .7 .2 .5
1.5
2.0 .3 .2 .1
2.2 3.9
2.3 2.4 .4 .5 .2 .2 -.2 .3
As * of Salesi Division Contribution
gross Profit SAtlB 6 Sales/f Investment
19.2 25.3
6.4 .66
26.9 33.7
7.1 .92
5.4 12.9
7.8 .59
7.3 15.1
8.0 .61
12.5 20.2
7.8 .63
Selling Price/lb Cost of Sales/lb
91.35 1.48 1.56 91.01 .961 1.36
1.56 1.56 1.32 1.25
Capacity - MMlbs Excess
Internal Vs* Salas
1.5 1.4 1.5
--
.2
--
1.5 1.4 1.3
1.5 1.5 * *. --
1.5 1.5
Saccharin profit* suffered a aarioua drop in 1963, which continue* in 1964. By 1965 *upply and demand should balance and we should again return to a 10K KOI. During tha year* 1963 and 1964 Monsanto i* importing saccharin and OT6A in order to supply our customer*. This along with start-up and higher plant costs, reduces profitability to an unacceptable level. Our new and efficient plant is now
operating, producing good-quality saccharin. The toluene sulfonchlorlde and amide plant is being expended with completion schedule for July 1964. This will improve profitability upon completion. The price of saccharin will continue to be under pressure from Japanese producer*, particularly if tariffs are reduced, we expect to continue the manufacture and sal* of eaocharln as a part of our enlarged effort to serve a food processor market. We will, therefore, not judge the merit of this program entirely by the sales and profits resulting from saccharin but from the development of new sweetenere including saccharin a* on* of the components. There is good evidence of initial success in this improved sweetener program.
0633490
-84-
SAHTICIZER 141 {$ in Millions)
Gross invest. - sale* Internal Uaa Total
Actual_______ 1961 im 1963
$ 3.3 3.7 3.0 6 .2 .3 .5 $ 3.5 4.0 3.5
1964 Budget Cap'ty
3.2 3.2 .6 .6
3.8 3.8
For Salesi % ROI (after tax)
11.6 15.5 16.7
20.0 21.2
Bales gross Profit SAAB Other Income Division Contribution
9 3.3 3.1 2.9
9 1.0 1.3 1.3
9 .2 .2 .2
9-
.1 -
9 .B 1.2 1.1
2.9 2.9 1.3 1.6
.2 .2 --
1.3 1.4
As X of Salesi Division Contribution Oross Profit SARD
$ Sales/6 Investment
23.4 30.6
B.l
1.03
37.S 41.6
5.7 .96
40.1 45.1
5.9 .92
44.3 50.3
6.2
.90
47.0 33.0 ,6.2
.90
Selling Price/lb Cost of Sales/lb
Capacity - MMlbs Excbbs Internal Use Sales
$.332 $.230
# 1.0 10.1
.327 .191
*
-
.9 9.6
.325 .178
* 2.2 8.9
.324 .161
10.8
-
1.8 9.0
.324 .152
10.8
1.8 9.0
Product mads in multiple purpose equipment Which causes a fluctuating capacity to exist.
This product, has been marketed as a specialty and pricing was kept at high levels during the do? competitive period. The patent on 141 expires in 1966 and it is anticipated to move 141 in special blends at lower prices to those markets where the specialty price is not justified; thus retaining volume and discouraging competition.
Improvement in raw material costs and in productivity as a result of debottlenecking has contributed handsomely to lowered costs. At 160 we are in a relatively commanding position to meet competition) other phosphate esters which can be used in vinyl formulatione cost 20-220 psr pound and are priced at 24-300 per pound. Although the new procesa for phosphate estere completed by research in 1963 will not improve 6-141 costs, s-141 is helped by our alcohol conversion arrangement and by low-cost phenol.
Beginning in 1965 the average price of S-141 will decline in anticipa tion of patent expiration) but will continue to sell ae a relatively high-profit specialty, with return on investment at leaat 10k.
-65
0633491
SAMTICIZB8 160 ($ In Millions)
Qrots invest. - Salas
Internal Use Total
Actual 1961 1962 1963
$ 9.S $ 1.9 $11.4
11.0 3.6
14.6
10.7 5.2
15.9
For Balesi K BOX (after tax)
Sales arose Profit BARE Other Income Division Contribution
As % of Bales i Division Contribution gross Profit BARE
$ Balea/$ Investment
1.4
$ 5.5 $ .7 $ .4 $$ .3
4.9 12.6
8.1 .58
.4 3.2
6.6 6.8 .5 1.1 .4 .4 -* .1 .7
1.4 11.1 6.8 16.6 5,7 5.9 .60 .60
Belling Prlce/lb Cost of Seles/lb
Cepalcity - MMlba
Excess
-
Internal Use
Bales
$.232 $.203
* es 9.2 23.7
.190 .177
*
-
13,0 34.9
.167 .139
88.3 26.6 21.4 40.3
1964 Budoet Cap'tv
11.5 4.3
15.8
11.5 4.3
15.0
3.9 6.2
7.4 7.4 1.4 1.9
.5 .5 - v. .9 1.4
12.3 18.5
6.2 .64
.160 .131
65.6 -
19.6 46.0
19.4 25.6
6.2 .64
.160 .119
65.6 *
19.6 46.0
Product mads in multiple purpose equipment Which causes a fluctuating capacity to exist.
Marketing strategy on Banticicer 160 was dedicated to preserving higher profit margins in the faaa of the OOP price elide. This plan succeeded and higher average net prices were maintained. Start-up costa at the new Delaware River plant were complete by early 1963 and by year-end it was evident that we have a completely successful, low-cost operation with with a demonstrated capacity of 65 million pounds. Other debottle necking steps are under way to take the capacity to 75 million pounds by mid-1964.
Bales have reached this level of production and for short periods in 1963 it was necessary to use multiple purpose equipment at either Everett or J.F. Queeny. This ia not expected in 1964 -- and will minimise over-all coBta. The price level will be preserved through 1964 and will incraaee about one cent per pound in 1965. With higher diviaor and lower costa we should return to a minimum return on investment of 6% (after tax).
Marketing strengths for 8-160 are excellent. It ie a superior plasticiser for vinyl flooring, particularly successful in vinyl asbestos. There is only one small competitor, Hatco, with limited capacity.
66-
0633492
WATER_PCB-00039784
(9 in Millions)
Oroa* Invest. - Sales Internal Uee Total
Actual_______
12& 1963 mi
9 1.0 2.3 2.0
.9
-
-
9 l. 2.2 2.0
1964
Ss&lix.
2.2 2.3 -
2.2 3.3
For Salesi X KOI (after tax)
3.5 9.9 6.5 10.6 17.8
Sslas
Oross Profit SAKE Other income Division Contribution
9 .7 1.5 1.7
9 .1 .4 .4
99-
.1 .1 --
9 .1 .3 .3
1.7 2.1 .6 .9
.1 .1 --
.5 .8
As # of Bales* Division Contribution Oross Profit SAKE
9 Seles/f investment
10.2 17.9
8.1 .70
18.9 23.5
5.6 .65
16.2 21.7
5.9 .83
28.5 34.6
6.2 .74
38.2 43.7
S. 5 .93
Selling Price/lb Cost of Seles/lb
9.386 9.317
.381 .292
.377 .295
.360 .380 .248 .214
Capacity - MMlba Excess Internal Us* Sale*
ft ft ft --- a- 3.5 3.8 4.4
5.6 5.6 1.2
--
4.4 5.6
Product mad* in multiple purpose equipment Which cause* a fluctuating capacity to exist.
This product; was the first of our polymeric Plasticisers, the largest
of several such materials manufactured at Everett. Additional experience
in manufacture ha* Improved costs as well as major reductions in th*
cost of adipic acid. .
.
Polymeric Plasticiser* are being developed as specialty products -- Santlclser 409 has been particularly successful in high-temperature vinyl wire coatings and in vinyl wall covering*. Competitive action by other producer* has been severe but we have chosen to retain 8-409 at a higher price level, taking the competitive action with our lowercost product, Santlclser 411. This strategy has been successful although a one cent price reduction was necessary in 1963.
Idle time in this equipment has been reduced as our program on Polymeric* expends. New product* such as 8-405. s-406 and B-402A will be helpful in filling thia line to capacity. New capital will net be required until 1966.
87 0633493
santocwb asp cyclex ($ in Million*)
Groaa Inveat, - Sale*
Internal U*e
Total
'
Actual 1961 1962
$ 1.2 $ .2 9 1.4
.9 l.l .1 . 1.0 l.l
- 1964 g.apJly.
1.0 1.1 .-
1.0 1.1
For Saleat. X SOI (after tax)
2S.1 34.4 25.5
30.6 62.3
Sale* Groaa Profit BARS
Other Income Diviaion, Contribution
9 1.8 1.6 1.5
9 .8 .8 .7
9 .1 .1 .1
9-
-
9 .7 .7 .6
1.4 3.1 .7 1.6 .1 .2 -*
.6 1.4
Aa W of Saleat Diviaion Contribution
Groaa Profit SAAB. $ 8ale*/$ Inveatment
3B.9 46.0
8.2 1.50
41.4 48.4
8.1 1.74
38.9 47.1
9.4 1.37
42.1 49.3
8.1 1.45
45.6 50.1
5.1 2.73
Selling Price/lb Coat of Salea/lb
Capacity - MMlbl Excel* Internal Dae Sale*
8.656 $.354
*
.5 2.8
.641 .331
* .5 2.5
.651 .344
* 2.4
.668 .339
4.6 2.5
2.1
.668 .312
4.6 .
4.6
Product mad* in multiple purpoee *qulpm*nt which cauaea a fluctuating capacity to axiat.
Thia rubber accelerator continue* to ba a high-profit product. Operating coat* have, declined aa the remit of lowar price* on purchaaad raw material* eudh aa anlllna and cyclohexylamina.
Although price level* have held aucceeafully, new competition haa been Introduced by Goodrich, American Cyancunid and Naugatuck, in delayed-action accelerator* Which are currently priced at the earn* level aa Santocure. In the next aeveral year* competitive action may force tha price of Santocure to lower level*. w* anticipate, however, that earning* will remain aubatantially above the diviaional average.
0613494
SAKSPCVRS B6.AHD CYCX.EX, B (8 in Millions)
oross invest, - sales intsrnal Use Total
For salesi % HOI (after tax)
Sales Oross Profit SAHS Other Income Division C ontributlon
As % of Balss Division Contribution oross Profit SAKS
$ Sales/8 Investment
*<=tul
A2k ASM AIM
8 2.6 2.8 3.5
9 .1
-
-
9 2.7 2.8 3.5
- 1964 Budget Cap1tv
4.0 4.0 a.
4.0 4.0
11.8
9 2.6 8 .8 8 .2 88 .6
14.3
3.0 1.0
.2 .8
8.9
3.1 .9 .3 .6
9.8 11.9
3.5 4.0 1.0 1.2
.2 .3 * .8 .9
24.9 32.2
8.2 .99
27.6 34.9
8.1 1.08
20.7 29.4
9.4 .89
22.2 29.7
8.1 .88
23.5 30,4
7.3 1.01
Selling Price/lb Cost of Snles/lb
Capacity - MMlba Excess Internal Use Sales
8.506 8.343
# .1 3.1
.485 .315
*
.1 6.2
.439 .310
* 7.0
.460 .324
8.8 1.2
7.6
.460 .320
8.a . .
8.8
Product mad* in multiple purpose equipment which causes a fluctuating capacity to exist.
Profitability has declined as selling price losses have exceeded coat
savings. It is hoped, however, to arrest the trend in 1964, however,
like Santocure, it faces price competition.
-
Firestone has been our major customer of this uniqus delayed-action accelerator. A revised marketing strategy is being developed to promote new sales of this product, potentially the lowest-cost delayed-action accelerator in our line. Sales to customers on a broad basis will increase the average return on investment from this product.
Further efforts will continue to improve coste of the intermediate T-Butylamine and this will further reduce the operating cost of Santocure MS.
89 0633495
SANTOFLEX AW AMD AJONE E (9 in Millions)
Actual
1964
1961 1962 1963 Budget Cap'tv
Gross Invest. - Salas
$ 3.7 6.1 5.8
Internal use ? 1.1 1.6 1.9
Total
6.6 7.7 7.7
4.0 4.9 2.3 2.3 7.1 7.2
For Sales X ROI (after tax)
22.6 22.9 23.3 26.9 32.9
Sales arose Profit SARI! Other Income Division Contribution
? 6.3 6.5 5.9 9 3.1 3.3 3.3 ? .5 .5 .6
? .1 .1 .1 ? 2.7 2.9 2.8
5.0 5.9 3.0 3.6
.4 .4 a.
2.6 3.2
As % of Salest Division Contribution
Gross Profit EARS
$ Sales/? investment
42.5 49.4
8.2 1.11
44.9 51.8
8.1 1.07
48.1 56.2
9.4 1.01
52.4 89.4
8.1 1.02
55.0 61.3
7.2 1.20
Selling Price/lb Cost of Sales/lb
Capacity - MMlbe Excess Internal use Sales
9.631 9.319
-
2.4 10.0
.606 .292
3.3 10.7
.582 .255
*
-
4.3 10.1
.610 .248
15.0 1.5 5,3 8.2
.610 .236
13.0 a.
5.3 9.7
Product made in multiple purpose equipment which causes a fluctuating capacity to exist.
Santoflex AW is the major antidegradant in the Monsanto line and a
major contributor to the profitability for the rubber Chemicals
group.
.
Coet improvements have derived from lower-cost para-phenetidine and acetone. Unfortunately,, para-phenylenedlamine products are proving technically superior for antiozonant formulation. In the next several years part of the volume of Santoflex AW will be replaced by the phenylenediamines. Forecasts indicate a higher coat for the phenylenediamines, particularly in the developmental period and, aa a result, total earnings of this product group will be lower for the next three years.
Our marketing strategy for entiozonente end antioxidants include* a program which should hold the maximum percentage of Santoflex AW in our line, using its desirable properties to supplement the superior entiozonent performance of the phenylenediamines. We have an 80S probability of succeeding in this program.
-90-
0633496
SAKTOfLEX PD AMD AJONE DP (9 in Millions)
rose Invest. - Sales Internal lies Total
Actual_______
mi 1962 mi
$ 1.8 2.7 2.8 9 .4 .1 .1 9 2.2 2.8 2.9
1964
2.2
.1 2.3 -
2.3
-
3.3
For salesi
-
% KOI (after tax)
23.7 26.2 20.2 25.5 33.4
Sales gross profit SAtut Other Income Division Contribution
As % of Salas Division Contribution Gross Profit EARS
$ Sales/9 Investment
9 2.4 9 1.1 9 .2 99 .9
37.2 44.3
8.2 1.33
3.2 1.7
.3 .1 1.5
45. B 52.7
8.1 1.19
2.7 2.6 1.4 1.3
.2 .2
--
1.2 1.1
' 43.4 51.6
9.3 .97
43.5 50.6
B.l 1.17
2.9 1.7
.2
-
1.5
51.8 58.5
7.S 1.29
Selling prlce/lb Cost of Salee/lb
Capacity - MMlbs Excess Internal Ose Sales
9.358 9.200
* 1.6 6.8
.350 .165
*
-
.3 9.1
.347 .168
* .2 7.9
.356 .176
8.4 .8 .2
7.4
.356 .148
8.4 .2
8.2
product mads in multiple purpose equipment which cause* a flutuating capacity to exist.
Cost improvement over 1961-1963 has resulted from lower manufacturing costs for Dodecyl Benzene, Dodecyl Aniline and Acetone, the inter mediates for this product, improved freight rates were also negotiated in 1963 on the move between Krummrich and Kitro plantst barging of Acetone to Hitro was established. Major application is as a
stabilizer in synthetic butadiene-styrene rubber. The phenylenediamlne* will have some impact on this application but a major share of the Santoflex DU sale is expected to continue. The low price of this material will help to hold it in the stabilizer application.
Our over-all marketing strategy for antidegradant* includes the effort to maintain maximum sales of Santoflex DD wherever it can perform successfully. Probability of success -- 70S.
91' 0633497
SMIffiTfrEX 36 <$ in Millions)
Gross invast. - Salas Internal Use Total
Actual 1961 1962 1963
$ .7 $* .7
2.2 2.6 - --
2.2 2.6
. 1964 Budget Can'tv
l.S 1.8 -_
1.8 1.8
For Saleai % SOI (after tex)
(30.6) (11.1) (9.5) - 2.6
Sales Gross Profit SAKE Other Income .
Division Contribution
$ .1
.6 1.1
1.4 1.4
$ (-4) (.5) (.4) .1 .2
$ - - .1 .1 .1
$- - -
--
$ (.4) (.5) (.5)
.1
AS X of Sales* Division Contribution Gross Profit SARI
$ Sales/S Investment
- - (46.3) - (91.9) 06.9)
e.i e.i 9.4 .26 .23 .43
- 6.6 7.9 14.3 0.1 8.1 .79 .79
Selling Price/lb Cost of Sales/lb
Capacity - MMlbs Excess Internal Use Sales
$1.36 $4.63
* .1
1.15 2.20
* .5
1.03 1.41
* 1.1
1.07 .980
1.3 -
1.3
1.07 .918
1.3 -
1.3
`product roads in multiple purpose equipment which cause* a fluctuating capacity to exist.
On* of the new phenylenediamine antidegradente, santoflex 36 has encountered some toxicity problems and will be completely displaced
by other products of lower toxicity. We anticipate Santoflex 13 and Santoflex 77 ae a complete replacement for thle product, with the exchange progressing in 1964 and completed by mid-yeart the new products will occupy the equipment vacated by Santoflex 36.
0633496
-92-
WATER PCB-00039790
SANTOLUBS 203 B&C (IHCL. SAHTOLEHE P&FC) ($ in Millions)
Gross Invest. - sales Internal Use Total
For Salesi % ROI (after tax)
Sales Gross profit SAKE Other Income Division Contribution
Actual_______ 1,9,6). 1962 1263
S 1.9 1.7 1.2
$ .5
.3 . .7
$ 2.4 2.2 1.9
1964 Budget ap' tv
.9 1.0 .9 .9 1.8 1.9
7.2
$ 1.7 $ .5 $ .2 $$ .3
13.0
1.9 .7 .3
-
.4
10. B
1.4 .5 .2 .3
6.2 23.9
1.0 2.3 .2 .7 .1 .2
--
.1 .5
As 74 of Salesi Division Contribution Gross Profit BARB
$ Sales/S Investment
16.3 29.6
13.4 .91
24.0 37.6 13. e 1.13
19.9 33.8 14.2 1.13
11.9 24.7 13.0 1.08
21.7 30.9
9.3 2.20
Selling Price/lb Cost of Sales/lb
Capacity - MMlbS Excess Internal Dbo Sales
$.179 $.126
* 3.6 9.7
.219 .136
*
-
4.2 8.6
.226 .149
* 3.8 6.2
.191 .144
17.2 6.9 3.1 5.2
.191 .132
17,2
-
5.1 12.1
Product made in multiple purpose equipment which cause* a fluctuating capacity to exist.
Bantolube 203C will soon become extinct with the loss of raw material
source as the result of Inorganic Division's change to a biodegradable
detergent.
'
Sales of 203C in the past have been divided between fuel oil detergent, sales to Mobil as such, and as a component of blends, it is no longer competitive with products from Bryton, Sonnebom, Lubrieol, etc. as a motor oil additive (Sulfonate).
Manufacturing costs have varied upward as the result of volume and from yield variations due to the quality of high boiler material supplied by inorganic Division.
The product will be replaced within the next year by a new barium sulfonate, which will make use of Santolube 203 equipment.
930633499
SMJg-kVBE-19J (6 In Millions)
Gross invest. - Seles Internal Use Total
Actual 1961 1962 1963
$ 1.1
.9 1.2
4 .6
.6 1.4
9 1.7 1.5 2.6
_ 1964 Budget Can*tv
.7 .8 .S ,5 1.2 1.3
For Salesi * ROI (after tex)
Salea Gross Profit SAPS Other income Division contribution
As % of Salesi Division contribution Grose Profit GARB
$ Sales/9 Investment
15.0
* 1.6 * .5 $ .2 $9 .3
16.6
1.5 .5 .2 .3
17.5
1.7 .7 .2
-
.5
40.6
2.4 1.0
.3
-
.7
67.9
3.4 1.5
.4 1.1
20.7 33.9 13.4 1.51
19.9 33.5 13.9 1.74
27.0 40,0 14.2
1.35
29.5 42.1 13.0 3.43
32.1 43.0 11.1 4.23
Selling Price/lb Cost of Seles/lb
Capacity - MMlbs Excess Internal Use Sales
6.266 4.176
* 5.6 6.1
.230 .158
* * 7.6 6.4
.244 .145
*
-
0.6 6.8
.277 .160
20.1 3.5 7.0 0.8
.277 .158
20.1
-
7.8 12.3
"Product made in multiple purpose equipment which ceueet e fluctuating capacity to exist.
Santoluhe 393 ie sold ie to Mobil and other oil companies, it is aleo ueed in petroleum additive blende. This has been a stable member of the petroleum additive product family and has consistently Improved
in profitability over the past few years. Selling prices have fluctuated eomWhat in line with competitive products but costs have improved considerably as the result of increased volume, improved yields and lower raw material coata.
It ie anticipated that thia product will continue to ahow favorable profit performance in the future.
-940633500
($ in Millions)
Actual_______
1964
1961 1962 1963 Budget Cap'tv
Grose invest. - sales
$ 2.6 2.1 2.3
Internal Use $ -
1.3 1.2
Total
$ 2.6 3.4 3.5
2.8 2.9 .5 .5
3.3 3.4
For Salesi 34 ROI (after tax)
(2.5) 3.4 1.9
3.2 12.0
Sales Gross Profit SARE Other Income Division Contribution
As 34 of Sales> Division Contribution Gross Profit SARE
$ Sales/$ Investment
$ .3 $ (.1) $$$ (.1)
1.7 .4 .2 -
.2
2.1
.4 .3 -
.1
2.8 4.2 .6 1.2 .4 .5 * '-
.2 .7
(39.3) (26.0)
13.3 .13
9.0 22.5 13.8
.80
4.3 18.3 14.2
.91
6.6 19.4 13.0 1.01
16.7 27.4
10.9 1.43
Selling Price/lb Cost of Sales/lb
$.157 $.197
.158 .122
.158 .129
.160 .160 .129 .116
Capacity - MMlbs Excess Internal Use Sales
39.3 37.1
-
2.2
24.8 6.1 7.9
10.8
33.6 13.2
7.0 13.4
29.6 8.6 3.3
17.7
29.6
-
3.3 26.3
This product was developed to replace large quantities of Amoco 121 that were purchased from our competitor. Profit performance has been much leas favorable than anticipated due to various factors. These include changes in additive requirements to meet performance demands of the auto industry and competitive pricing influences.
Since the outlook for Santolube B01 indicates that the volume is expected to level off and then decline, we are now planning for utilisation of the idle capacity for other detergent additives. Probability for success in using the plant for production of highbase calcium sulfonate appears favorable at this stage of the evaluation.
-95-
0639901
SANTOPHEB 1 ($ in Millions)
Actual_______ 1261 1962 1$63
1964 Budaet Cap'tv
Oross Invest. - Sales Internal Use Total
For Salest * R01 (after tax)
Sales Oross Profit SARK Other Income Division contribution
As X of Selss i Division Contribution Oross Profit SARE
$ Sales/$ investment
$ 1.4 $$ 1.4
7.1
$ .8 $ .3 $ .1 $$ .2
24.7 30.8
6.S .60
1.4 1.7 * '-
1.4 1.7
9.7 9.4
.9 1.0 .4 .4 .1 .1
.3 .3
32.1 38.8
7.1 .63
32.9 40.1
7.8 .60
1.8 1.8
1.8 1.8
12.8
1.0 .5 .1 .4
17.1
1.2 .7 .1
_
.6
45.2 52.4
8.0 .56
49.7 56.1
6.9 .69
Selling Price/lb Cost of Sales/lb
Capacity - MMlbe Excese Internal Use Sales
$.640 $.443
* 1.3
.641 .392
2.0 .6 *
1.4
.635 .380
1.9 .3
1.6
.645 .307
1.9 .3 -
1.6
.645 .283
1.9 -
1.9
Product made In multiple purpose equipment Which causes a fluctuating capacity to exist.
Profitability is improving each year, particularly since the installation of the new plant at WOK with lower coats. Monsanto's strength is in having the best product on the market to supply the germicide needs.
Pricing should remain firm and costs will be improved, as forecast,
by about 20X. A steady growth in volume should be available in this product in coming years.
0633502
-96-
WATER PCB-00039794
SANTOPOIP 23 RI 6 33 RIA (f in Millions)
Oross Invest. - Sales Internal Uee Total
Actual ,,____ 1961 1962 lSSl
6 1.8 l.S 1.7 *- - 6 l.S l.S 1.7
____ 1964 Budget fiaalSy
1.1 1.1 -
1.1 1.1
For Salest K ROI (after tax)
13.9 IS,3 13.7
26.6 30.9
sales Oross Profit SARK
Other income Division Contribution
$ 2.0 2.2 2.4
* .9 .0 .0 6 .4 .3 .3 *- - * .s .5 .9
2.4 2.4 .9 1.0 .3 .3 --
.6 .7
As X of Palest Division Contribution Oross profit SARK
$ Salee/f investment
10.5 31.7 13.4 1.56
21.0 34. S 13.0 1.52
19.9 33.0 14.2 1.43
2S.4 30.0 13.0 2.10
39.3 41.0 13.0 2,18
Selling Frlce/lb Cost of Bales/lb
Capacity - MHlbs Excess Internal Use Sales
$.294 $.201
* 9.9
.306 .301
* 7.3
.303 .201
7.0
.307 .190
7.7 -
7.7
.307 .101
7.7 -
7.7
Product mad* in multiple purpoaa equipment which causes a fluctuating capacity to exist,
Santopoid23 RI is our proprietary, patented gear oil additive which has attained a strong position in the market. The product has exhibited excellent growth and profitability eince its development in 1996, With this additive we have obtained a major share of the market and sales volume has leveled off. Selling prices and costs have remained relatively stable over the years and are expected to continue at current levels. Fuller utilisation of equipment by other produote and elimi nation of Acetone investment from usage are the major reasons for investment drop in 1964.
The future of the Santopold 33 RI is somewhat uncertain In view of potential competition. We are working on the development of an alternate or supplementary product but are endeavoring through aggressive marketing efforts to maintain a strong position with 23 RI,
Market developments and performance requirements over the next 3 to 3 years may determine the extent of success we can achieve with this product.
-97-
0633903
SAHTOWHITB- CRYSTALS ASP SAKTONOX tlNCh. SAHTOKOX B) (9 in Millions)
arose invest. - Sales Internal Vse Total
Actual_______ 1251 im 1963
l.l 1.2 1.7
9-
.1 -
9 1.1 1.3 1.7
1964 Budget Cap1tv
2.0 2.4 - .1
2.0 2.3
For Bales % ROI (after tax)
Sale* Gross Profit SAMS Other Income Division Contribution
As % of Sales Division Contribution Gross Profit SAW!'
$ Sales/9 Investment
ie.8
9 l.S 9 .5 9 .1 $$ .4
24.4
2.1 .7 .1 .6
17.0
2.0 .8 .2 .6
20.3
2.4 1.0
.2 .8
35.7
6.9 3.0
.3 2.7
27.7 33.0
0.2 1.41
29.9 39.5
6.9 1.70
30.8 37.4
7.4 1.20
34.0 40.7
7.1 1.21
39.6 43.8
4.3 2.81
Selling Price/lb Coet of Sales/lb
Capacity - MMlbs Excess Internal Use Sales
01.77 91.13
* .6
1.01 1.17
* -
1.2
1.83 1.15
* 1.1
1.79 1.06
3.8 2.3
1.3
1.79 1.01
3.8 -
3.8
Product mad* in multiple purpose equipment which causes a fluctuating capacity to exist.
Cost improvements have resulted from lower-priced raw materials. Further efforts are 'under way to again reduce prices of the purchased
material. We anticipate that the selling price will be maintained at somewhat lower levels, but lower costs should keep this product at approximately the 30% earnings range. This it a specialty antioxidant. Hew competitive products are being introduced but we believe the performance of SantoWhite crystals Justified the price level. From time to time there has been some review of manufacture by the suppliers of raw material, but none of these companies is in e position to market successfully to the rubber trade.
0633504
-90-
SPMgfe
(9 in Millions)
Actual
1964
1961 1963 1963 budget CSP'ty
Orca* invest. - Sals* Intarnal uae Total
For Sales* S SOI {after tax)
9 .4 99 .4
34.6
.4
-
.4
35.3
.4
-
.4
30.3
.3 .3
--
.3 .3
39.9 40.3
Sales Gross Profit EARS
Other income Division Contribution
9 .7 .6 .6 9 .4 .4 .3 9 .1 .1 .1 9- - $ .3 .3 .2
.6 .7 .4 .4 .1 .1 --
.3 .3
A* X of Salas* Division Contribution Gross Profit GARB
$ Sales/9 Investment
42.7 52,6
9.0 1.69
42.3 56,3 14.0 1.75
41.3 57.1 15.0 1.53
44.2 50.4 14.3 1.00
45.0 59.0 13.9 2.10
Selling price/lb Coat of Sale*/lb
Capacity - MMlbs Excess Internal Uae Sales
91.32 9.626
.6
1.32 .577
.5
1.32 .563
* .5
1.32 .550
.5 .1 .4
1.32 .532
.5 -
-
.5
Product made in multiple purpose equipment which cause* a fluctuating capacity to exist.
Thi* product alio known ae Skydrol 7000, waa developed for uae in the piaton engine aircraft such aa The Douglas DC 4, 6 and 7, It haa been a very profitable item but sale* have been declining due to phasing out of the piaton engine aircraft and replacing them with jet aircraft.
Both selling price* and coata have been relatively stable over the life of the product and thi* situation la expected to continue until such time as the volume reaches a very low level.
The product is being succeeded by Skydrol 500A, the hydraulic fluid being need in jet aircraft.
990633505
SKYDROL 500-A (9 in Millions)
Oross Invest. - sales Internal use Total
For Sale*i % ROT (after tax)
Sales Oroea Frofit SARE Other Income Division Contribution
As % of Salesi Division Contribution Oross Profit SARE
9 Sales/!) investment
-______ Actual,. 1961 1962 1?63
9 2.0
99 2.0
1.6 1,7 - -
1.6 1.7
26.3
f 2.6 9 1.4 9 .3
$~
9 1.1
30.7
2.6 1.4
.4
"
1.0
28.5
2.7 1.3 .4
-
.9
41.5 51.3
9.8 1.32
39.3 53.5 14.2 1.63
34.4 50.4 15.9 1.54
1964 Budget Cap*tv
1.8 1.8
1.8 1.8
32.0
3.1 1.6
.4
1.2
38.4
3.5 1.9
.5
1.4
38.8 53.0 14.2 1.72
39.8 53.7 13.9 1.93
Selling Priee/lb Cost of flales/lb
91.61 1.62 $.781 .753
1.60 ,794
1.58 1.58 .745 .734
Capacity - MMlbs Excess Internal Use Bales
**
-
1.6 1.6 1.7
2.2 2.2 .3 -
1.9 2.2
Product made in multiple purpose equipment which causes a fluctuating capacity to exist.
Skydrol 500A is well accepted by most of the commercial jet aircraft producers in the V.8. and Europe. The product has exhibited vary
favorable growth and profitability and is expected to continue to do
so for the predictable future of the current generation of jet air craft.
The leveling of sales during 1961-1963 inclusive is attributable to improved maintenance of jet aircraft and slowdown in the production of jet planes in the U.S, Another growth period for the product is expected during the next few years with the ubs of Skydrol SOOA in the Boeing 727, Vickers VC-10, PeHaviland Trident, and The BAC 111 all new jet aircraft juet reaching the commercial etage.
0633506
-100-
imoriPB ($ in Millions)
Gross Invest. - Bales internal Use Total
Actual
12SA 1962 I2M
9 .7 .6 .9 $9 .7 .6 .8
1964 fidget Cap'tv
.9
.9
For Salest ROI (after tax)
17.2 20.4 14.4
13.4 33.8
sales Gross profit SARE
Other Income Division Contribution
8 .9 .8 .7 9 .3 .3 .3
9 .1 .1 .1
$-
9 .2 .2 .2
.0 1.9 .3 .7 .1 .1
.2
As % of Sales Division Contribution Grose Profit BARE
9 Sales/9 Investment
29.4 36.8
8.2 1.22
34.0 41.1
8.1 1.25
31.4 39.9
9.4 .96
27.5 34.9
8.1 .97
32.1
36.7 4.8
2.11
Belling Price/lb Cost of Bales/lb
ipacity - MMlbs Excess Internal Uee Bales
9.456 9.288
*
-
1.9
.463 .273
-
-
1.7
.472 .284
* 1.5
.450 .293
4.2 2.5
-
1.7
.450 .285
4.2
-
4.2
Product made in multiple purpose equipment which causes a fluctuating capacity to exist.
Thiofide has been a successful accelerator for rubber vulcanisation but has become essentially a commodity product, trew production by rubber manufacturers and efforts by other suppliers to hold market position are now likely to reduce the price level. Thiofide (Thimor)
ie aleo used as an intermediate for Santocure MOR and M0R-90. Currently total requirements for internal use and for sale are close
to exceeding the installed capacity. However, we plan to continue to promote Thiofide sales and by other meane reduce the consumption for Santocure MGR.
A sharp drop in $ Sales/9 investment has reduced return on investment in 1963 and 1964.
101-
0633607
1,4,4-TRICHLOROCARBABILlPB ($ in Millions)
Gross Invest. - Sales Internal Use Total
For Salesi % roi (after tax)
Sales Gross Profit SAKE Other Income Division contribution
As % of Salesi Division Contribution . Gross Profit BARS
$ Bales/? Investment
Selling Price/lb Coat of Salas/lb
Capacity - MMlbs Excess Internal use Sales
Actual_______ 1961 1962 1963
$ 2.6 9$ 2.6
2.3 3.0 - '-
2.3 3.0
1964 BMdge* CAP'tv
3.2 3.5
--
3.2 3.5
27.0
9 3.3 $ 1.7 9 .2 99 l.S
29.4
3.2 1.6
.2 1.4
20.0
3.2 l.S
.3 -> 1.2
25.0
3.6 1.9
.3
a.
1.6
49.9
6.5 3.9
.3
-
3.5
44.7 50.5
6,4 1.26
$1.87 $.923
* 1.8
43.7 50.3
7.1 1.41
1,89 .940
* -
-
1.7
39.6 45.7
7.7 1.08
1.99 1.03
* 1.7
44.1 51.4
9.0 1.13
1.90 .924
3.4 1.5
a-
1.9
53.3 59.4
5.5 1.97
1.90 .791
3.4 -
*
3.4
Product made In multiple purpose equipment which causes a fluctuating
capacity to axiat.
-
This la a proprietary product of Monaanto'a in vhidh wa aarva tha bacterioetat market. Monsanto ia fully integratad in intermediates and axpaota improved products of thia typo to enlarge tha markat for bacterloatata particularly in laundry detergents. Thia product, or ita successor, will continue to earn an excellent margin and KOI,
102 0633500
WATER PCB-00039800
VMMIP ($ in Millions)
gross Invest. - Sales Internal Use Total
For Salast S KOI (after tax)
Sales Gross profit EARS Other income Division Contribution
As H of Saleai Division Contribution Gross profit SARK
$ Sales/4 investment
Sailing Price/lb Cost of Sales/lb
Actual_______ _
1251 1962 1963
4 2.0
*$ 2.0
2.4
-
. 2.4
2.6
-
2.6
12.3
4 1.8 4 .6 4 .1
44 .5
21.7
2.6 1.3
.2 1.1
1S.1
2.4 1.1
.2
-
.9
2S.3 34.3
6.4 .90
42.06 41.35
40.4 47.1
7,1 1.12
2.19 1.16
40.1 47.2
7.7 .94
2.22 1.17
1964 Budget Saj'tv
2.4 2.4
_
2.4 2.4
24.9
2.8 1.4
.2
-
1.2
27.4
3.0 1.5
.2
-
1.3
42.9 50.3
8.0 1.16
2.26 1.12
44.8 51.9
7.7 1.22
2,26 1.09
Capacity - KMlbs Excess Internal One Sales
1.3 1.3 1.3 .4 .1 .2 - --
.9 1.2 1.1
1.3 1.3 .1 -
1.2 1.3
Vanillin profitability he* alwaya been good. Currently wo aro fully occupying th capacity of our plant by veiling to other producers. This should result in an all-time high HOI of 24.9%. This highprofit margin item is subject to price reductions by competitors and reeallars making the pricing situation somewhat fluid. Nevertheless, we have maintained a $3 per pound selling price for the V.8.P. product and we forecast a rather stable margin. Costa have been
improved steadily and capacity has bean increased. He expect the present situation to be maintained.
103' 0633509
PLASTICS DIVISIOH
Division profitability hat bean (?MM's)
% Return on Investment AT Gross Investment Sales Division Contribution BT Div. Cont. as % of Sales $ Sales/? Investment
1961
2.7 134.6 130.5
10.3 7.9 .71
Actual -1962
2.6 219.3 134.9
12.1 9.0 .62
1.7 224.1 130.7
7.9 6.0 .59
1964 Budget
2,6 239.0 141.6
12.6 8.9 .59
In 1963 investment in the divisions' products earned the following rates of returni
LOSS
0 to 3% 3 to 5.9% Over 5.8%
% of Total
Investment 42.4 7.5 33.9 16.2
Major products reported arei
Aminoplasts Formalin HI Density P.E. Latices Low Density P.E. Lustran Lustrex mm Opalon Phenoplasts Polyelectrolytes Proteins Saflex Ultron Film
Page
105 106 107
ioe
' 109
110
111 112 113 114 115 116 117
These comprise 100% of the divisions' investment in 1963.
0633610
-104-
WATER PCB-00039802
AMIHOPLASTS ($ In Millions)
Actual
1964
1961 1962 1963 Budget Cao`tv
Gross invent. - Sales Internal Use Total
For Salesi X ROI (after tax)
$ 9.0
39 9.0
8.9 10.1 -' -
B.9 10.1
11.3
-
11.3
12.1
-
12.1
9.0 8.1 8.8
8.3 14.6
Sales Gross Profit SAKE
Other Income Division Contribution
9 9.9 9.S 9.7
9 2.6 2.4 2.7
9 1.0 1.0
.9
3 .1 .1 .1
3 1.7 1.5 1.9
9.9 14.5 2.7 4.6
.9 1.1 .1 -
1.9 3.5
As S of Salesi Division Contribution Gross Profit
BARE $ Salee/9 Investment
17.3
26.7 10.4 1.09
15.9 24.8 10.1 1.06
19.1
27.7 9.0 .96
IB. 8 27.4
9.1 .88
24.2 31.9
7.9 1.20
Selling Prloe/lb Cost of Sales/lb
$.236 $.173
.235 .177
.242 .175
.203 .214 .148 .146
Capacity - MM lbs Excess Internal Use Sales
31.7 9.9
-
41.8
56.9 16.7
.
40.2
S8.0 17.9
-
40.1
68.0 19.1
-
48.9
68.0
-
-
68.0
Renewed emphasis on research the past few years played a major role In the significant increase in 1963 sales. The two major market areas for aininoplasts are laminating resins and automotive coatings. Our quality position in coatings is second to none and is even now recognised in Europe with some willingness to pay premium price over local products. Our laminating resin competition is becoming keener with the entry of new suppliers, and the larger customers going captive. There is also a pressure to convert from powdered resins to syrups which are now being evaluated by the Plastic* bivision. The lower profit and price in the 1964 budget reflects these pressures.
105' 0633511
FORMALIH {$ in Millions)
Oross Invest, - Sales
Internal Use Total
Actual 19.61 1962 1963
$ 4.0 5.2 5.4 $ 2.0 2.0 2.0 $ 6.0 7.2 7.4
1964 Budcret Can`tv
5.8 5.8 2.0 2.0 7.8 7.8
For Salest % ROI (after tax)
Sales Cross Profit BARE Other Income Division Contribution
As % of Sales i Division Contribution Cross Profit
barb
$ Sales/$ Investment
9.0 6.2 7.3
$ 2.0 2.4 2.5 $ .8 B .8 9 .1 .i .1 $ - - .1 $ .7 .7 .8
8.7 8.9
3.0 3.1 1.0 1.1
.1 .2 .1 .1 1.0 1.0
38.0 42.4
4.5 .49
28.7
33.4 4.7 .45
33.6 33.6
4.9 .45
33.1 33.8
4.6 .52
33.3 34.0
4.5 .54
Selling Price/lb Cost of Sales/lb
$.028 $.016
.028 .019
.027 .018
.025 .025 .016 .016
Capacity - MM lbs Excess Internal use
Sales
155.0 43.9
42.0 69.1
155.0 23.1
49.6 82.3
165.0 22.3 '51.9 90.8
215.0 3.5
88.8 122.7
215.0 -
88.8 126.2
Formalin sales have the insurance of long-term contracts, the largest of which in a S-year contract with American Cynamid. Cost of formalin benefit from a captive methanol position and are supported by strong formalin technology.
The newly approved Oregon facility (60MM lb, capacity) will be largely for captive use. However, any unused capacity will be sold when available.
The market price of formalin has been firm in recent years. Indi cations now point to some erosion in the near term but forward plans have anticipated a decline.
-1060633512
HI DENSITY P.E. ($ in Millions)
Gross Invest, - Sales Internal Ose Total
Actual 1961 1962 ISil
$ 1.7
6$ 1.7
4.7 9.9 - '"
4.7 9.9
1964 Budget Cap'ty
14.0 *
14.0
14.6
-
14.6
For Salest X SOI (after tax)
(32.0) (11.0) (18.3)
(9.2)
.2
Sales Gross Profit SARE Other Income Division Contribution
As X of Seles i Division Contribution Gross Profit SARE
$ Salea/$ Investment
$ .4 $-
S 1.1 5$(1.1)
1.2 ( .1) 1.0
-
(1.1)
.1 (2.9)
.9
-
0.8)
4.9 0.9)
.7
-
(2.6)
8.5 .8 .7 -
.1
-
6.1 '-
.22
(89.0)
( 9.B) 79,3
.26
-
-
.26
(52.6) (39.0)
13.5 .35
.7 9.3 8.6 .58
Selling Price/lb Cost of sales/lb
$.350 $.329
.310 .341
.310 1.93
.168 .170 .234 .154
Capacity - MM lbs Excess Internal Use Sales
1.0 3.9 1.6 ----*
1.0 3.9 1.6
50.0 21.0
-
29.0
50.0
-
50.0
In the period reported, sales in 1961, 1962 and much of 1963 represent resale of purchased material. Results of 1963 also reflect plant start-up problems with essentially no sales revenue. The budget for 1964 shows a steady improvement in production with operations ap proaching design premises by the end of the year. In the latter half of the year progress may be limited by the ability to develop outside sales or product to complement the policy decision to move only 65X of first-quality production to the Packaging Diviaion.
The industry in gensral suffers from excess Installed capacity and resultant price weakness. It is expected that by 1965 costs will be fully competitive to anyone in a similar plant alee and ethylene costs. The plant is expected to be modestly profitable over the next few years if it is allowed to supply the full requirements of Packaging Division, Without this advantage, resulte are expected to about break even.
107 0633613
LATICES ($ in Millions)
Oross Invest. - Sales Internal Use Total
Actual_______ I21 1962 1-963
$ 3.8 3.7 3.6 5- - $ 3.8 3.7 3.6
1964
Budaet
' tv
3.6 3.7 --
3.6 3.7
For Salesi % RIO (after tax)
4.6 7.4 9.1
9.3 10.8
sales Oross Profit SARE Other income Division Contribution
As ft of Sales t Division Contribution Oross Profit SARE
$ Sales/? Investment
$ 2.9 2.9 2.7
$ .9 .9 .9
$ .5 .5 .4
$'
.2 .2
$ .4 .6 .7
12.6 31.2 19.4
.77
20.2 32.2
19.0 ,77
26.0 32.5
9.8 .73
3.0 3.6 1.0 1.2
.3 .4
--
.7 .8
22.2
33.4 11.8
.84
22.3
32.6 10.8
.97
Selling Price/lb Cost of Sales/lb
$.153 ?. 105
.157 .106
.122 .082
.118 .117 .079 .079
Capacity - MM lbs Excess Internal Use
Sales -
28.6 9.6
-
19.0
40.6 22.3
-
18.3
39.5 17.7
-
21.8
30.5 5.2
*
25.3
30.5
-
-
30.5
Profitability has shown en upward trend. The change relative gcosa profit, SARI! and other income is the result of the sale of Lytron 680 to Union Carbide. Market outlet for current latex products in clude floor waxes, cup coatings, detergent opacifiers, and rubber stiffeners. Most of these are designed for retail saleB levels and highly dependent on customer merchandising programs. New outlets for latices and the development of improved properties are being sought to insure continued growth.
-108 0633614
WATER PCB-00039806
LOW DEHSITY P.B. ($ in Millions)
Gross Invest, - Sales Internal Use Total
Actual_______
1961 1962 mi
S33.0
$$33.0
49.2
-
49.2
41.9 1.9
43.0
1964 Budget Cap'tv
40.2
2.0 42.2
40.2
2.0 42,2
For Saleai % KOI (after tax)
2.3 1.0 (2.7)
(1.9) (1.7)
Salee Gross Profit SARE Other Income Mviaion Contribution
As % of Salast Division Contribution Gross Profit SARE
$ Sales/? investment
$20.3 $ 4.1 $ 2.7
$ .2 $ 1.6
20.3 3. S 2.6 .1 1.0
is.e (.3) 2.1
-
(2.4)
13.8
(.1) 1.5
.1
(l.S)
14.1
(.1) l.S
.1 U.5)
8.0 20.4
13.3 .62
4.9 17.2 12.8
.41
(15.0) ( i.e) 13.2
.58
(10.9)
( 1.0) 10.7
.34
(10.3)
( .6) 10.6
.35
Selling Price/lb Cost of Sales/lb
$.227 $.iei
.190 .157
.144 .146
.136 .136 .137 .137
Capacity - MM lbs Excess Internal Use
Sales
loa.o 18.6 -
99.4
110.0 3.0
-
107.0
114.4 .1
4.4 109.9
109.1 2.3 5,2
101.6
109.1
-
5.2 103.9
Sharp price declines were felt in 1961 and 1963!. This factor combined with adverse sales pattern in 1963 (loss of wire and cabls business because of production deficiency) put the product line well into a lose position. The budget for the year 1964 assumes further price declines end does not show any improvement over 1963.
Production coats have been reduced over the period reported but could not offset the price declines (additionally sare expense will drop $600M in 1964). The basic current problem la that volume, technology and ethylene cost do not appear to offer more than a breakeven position (corporate level) in today's competitive market.
Greater cost improvements are foreseen by 196S but it is anticipated that further price deterioration will hold operations at breakeven. Improvement in thru-put end on-stream time -- the current top priority manufacturing effort -- Bhould yield increased volume up to 130MM lbs. per year by 1967.
-109-
0633516
LUSTRAM {$ in Millions)
Gross xnveBt. - Sales Internal Use
Total
Actual 1& 1962 I&2
$ 9.S
$$ 9.5
16.7
-
16.7
16.8 -
16.8
1964 Budget can'tv
20.8
-
20.8
21.1
-
21.1
For Salesi 6 KOI (after tax)
(U.4) ( 7.9) 2.3
4.7 7.4
Sales
Gross Profit
BARB
Other Income
Division Contribution
$ .5 5(1.4)
5 1.0
55(2.4)
4.1
( 1.0) 1.8 .1
( 2.7)
8.1 1.9 1.6
.1 .4
12.7 3.8 1.9 .1 2.0
14.5 5.1
2.1 .1
3.1
As X of Saleei Division Contribution Gross Profit SARB
$ Sales/$ investment
.
- (66.9) 4.7 - (24.6) 23.9
- 44.1 20.3 .05 .25 .48
15.5 29. S 15.4
.61
21.6
35.1 14.4
.68
Selling Price/lb Cost of Sales/lb
5.390 51.S3
.328 ,408
.290 .220
.302 .212
.305 .198
Capacity - KM lbs Excess Internal Use Salas
1.2 17.9 28.4 - 5.3 .5
---
1.2 12.6 27.9
47.4 5.4
-
42.0
47.4
-
47.4
The significant increase in LuBtran Division Contribution in 1964 shows the effect of the first full year of operations of the new Lustran plant free of start-up expenses and operating at near capacity levels. Continuing profit Improvement can be expected as we expand our market share with new second generation Lustran 1 products becoming available in mid-1964. This lower capital cost' process further
solidifies our position as the lowest cost producer, which will permit ue to profitably expand total market demand in undeveloped markets through our leadership. Although new competition can be expected, the technical complexity and expense of establishing an ABS product line precludes the development of destructive competition to the extent that it exists in the Lustrex product line.
-110063351b
LUSTREX MM ($ In Millions)
Actual________ 1962
1964 Budoet Cap'tv
Gross Invsst. - Sales Internal Dae Total
$ 45.1
$6 45.1
53.S
-
53.9
55.3 3.5
58.8
55.6 4.3
59.9
55.9 4.3
60.2
For Salas i % ROI (after tax)
Sales arose Profit SARE Other Income Division Contribution
As % of Sales i Division Contribution Gross Profit SAKS
$ sales/$ investment
3.2
$ 34.3 $ 6.1 $ 3.9 $ .7 $ 3.0
3.6
34.6 7.0 3.8 .8 4.0
3.5
34.4 7.0 3.5 .5 4.0
8.7 18.0 11.2
.76
11.7 20.2
11.0 .64
11.6 20.3 10.2
.62
2.8
33.0 5.3 2.9 .7 3.1
3.3
34.7 6.0 3.0 .7 3.7
9.5 16.2
8.8 .59
10.7 17.4
8.6 .58
Selling Price/lb Cost of Salee/lb
$ .197 .162
.188 .150
,159 .127
.149 .149 .125 .123
Capacity - KM lbe Excess Internal Use Sales
216.9 43.0
173.9
234.9 51.5
-
103.4
265.5 37.2
11.9 216.4
251.3 11.5 IB.4
221.4
251.3 -
18.4 232.9
The level of return on Investment reflects continued price attrition Which has offset gains made In sales volumes and cost reduction. The decline in profitability in 1964 results from severe price decreases during the second half of 1963 and continuing into 1964. This at trition is expected to continue over the next two to three years ae a result of competitive pressure to move new styrene monomer capacity to be activated during this period.
A significant increase in demand is expected to result from these lower prices, particularly from the packaging markets. Profit improve ment will begin for those producers with sufficient capacity to supply the surge in demand which will occur by 1968. Pricing improvement will follow ae supply and demand coma into equilibrium.
We are end will continue to be one of the lowest cost producers by maintaining our current market Bhare.
-Ill
0633617
QPALQp ($ in Millions)
Actual 1961 1962 1963
1964 Sudaet Cats'tv
Gross invest. - Sales Internal Use Total
For Sales* X SOI (after tax)
Salea Gross Profit SAKE Other income Division Contribution
As K of Sales* Division Contribution Gross Profit SAKE
$ Sales/$ Investment
$30.5
$$30.5
30.7 32.4 - '-
30.7 32.4
34.9 -
34,9
34.9 -
34.9
(3.1) ( .7) (1.3)
$14.4
$ .2 $ 2.3
$ .1 $(2.0)
16.7 .6
1.8 .3
( .9)
17.2 .6
1.8 .3
( .9)
.7
19.9 2.1 1.8 .2 .5
.7
19.9 2.1 1.8 .2 .5
(13.7) 1.2
16.0 .47
(5.3) 3.8
10.7 .55
(5.3) 3.5
10.2 .53
2.6 10.6
9.3 .57
2.6 10.6
9.3 .57
Selling Prlce/lb Cost of Seles/lb
$.167 $.185
.171 .164
.162 .156
.172 .153
.171 .153
Capacity - MM Ibe Excess Internal Use Seles
84. 7 7.9 -
76.8
99.1 1.2
-
97.9
114.7 8.4 -
106.3
116.0 -
116.0
116.0 -
116.0
Despite continuing price declines during 1961, 1962 and 1963, together with Texas start-up problems in 1963, Opalon products show a steady trend toward better profits. Improved production yields in both polymers and copolymers plus Increased Bales volumes are largely responsible.
Although relatively poor profit performers, vinyl products could add about 4.2% of sales to division contribution by 1966. This will
require the vigorous pursuit of plans for three of our newest products to achieve that result.
The Plastics Division has taken the lead in reversing downward price trends with several recently announced price increases.
-112 0633318
PHEHOPLASTS in Millions)
Gross Invest, - Sales Internal Use Total
Actual_______ 1211 1962 1963
$ 18.3 ?$ 18.8
18.6 20.6 -' -
18.6 20.6
1964 Budget Cap'tv
24.2 -
24.2
24.9
24.9
For Salesi % KOI (after tax)
5.8 4.6 4.4
5.8 8.3
Sales Gross Profit SARK Other Income Division Contribution
As % of Sales t Division Contribution Gross Profit SARE
6 Sales/5 Investment
$ 13.2 $ 3.7 $ l.S $ .1 $ 2.3
12.5
3.1 1.5
.2 1.8
13.4 3.4 1.6 .1 1.9
17.3 27.6 11.3
.70
14.3 24.9
12.3 .67
13.9 25.4 12.1
.65
14.8 4.2 1.5 .1 2.8
19.2 5.8 1.8 .1 4.1
18.9 28.6 10.5
.61
21.5 30.4
9.S .77
Selling Price/lb Cost of Sales/lb
Capacity - MM lbs Excess Internal Use Sales
$ .143 S .104
.130 .098
.116 .087
133.7 41.7
-
92.0
136.8 41.0 *
95.8
163.5 47.9 -
115.6
.113 .111 .080 .077
173.1 41.5 -
131.6
173.1 -
-
173.1
Phenoplast sales are made in several major markets including thermal insulation, industrial laminates, battery separators, and plywood adhesives. The products are supported by many years of research. Ascent trend in the plywood industry to convert from natural glues to synthetic glues for interior glue lines has the potential of doubling the adhesive demand over the next five years. The thermal insulation market also continues to expand, and our 40% of the market includes e position as major supplier to Johns-Manville whose plants are located in the center of all domestic markets. Price attrition is expected to continue as the market price for phenol erodes. A basic cost position, coupled with a strong research and marketing effort, is forecast to overcome this problem area.
-113-
0633619
I
POLYELECTROLYTES (9 in Hillions)
Gross Invest. - Sales Internal Use Total
For Sales i % KOI (after tax)
Sales Gross Profit RARE Other Incoma Division Contribution
As % of Salest Division Contribution Gross Profit SARB
$ Sales/? Investment
Actual________
191 mi 1963
? 2.3
?? 2.3
2.3 - '`
2.3
2.8 -
2.8
1964 Budaet CaD'tv
3.0 3.2
-
3.0 3.2
19.9
9 3.0 $ 1.4 ? .4 ?? 1.0
18.7
2.5 1.3
.4 .9
16.3
2.8 1.4
.4 1.0
17.1
3.5 1.4
.4 1.0
27.3
4.6 2.2
.5 1.7
31.7 45.7
14.2 1.31
35.8 52.5
17.1 1.09
33.6 47.8 14.6 1.01
29.2 41.8 12.5 1.17
38.1 49.0 10.9 1.44
Selling Price/lb Cost of Sales/lb
9.542 .512 .500 9.294 .243 .261
.483 .281
.482 .246
Capacity - MM lbs Excess Internal Use Sales
8.0 8.1 6.7 2.4 3.2 3.0
_--
5.6 4.9 5.7
9.4 9.4 2.2 -
--
7.2 9.4
The major portion of polyelsctrolyte sales are going to acetate sizing markets. Current research is directed toward developing improved products that will he suitable for replacement of starch aB a cotton and cotton blend sice. Commercialization is anticipated by the fourth quarter of this year. Until recently these products were unique to the division in that they are not price sensitive. This psst year, however, competitors have found a way to circumvent our patent position and are becoming more active.
1140633520
WATER PCB-00039812
($ in Million*)
Gross Invest. - Sales Internal Os* Total
M
S l.S $$ 1.5
--- im 1963
1.5 1.6 - '-
1.5 1.6
1964 ludoet Cap 'tv
1.6 2.7 -*
1.6 2.7
For Salesi ft SOI (after tax)
2.9 1.3 (.8)
.1 14.8
Sale* Oroe* Profit SAKE Other Income Division Contribution
$ 1.7 1.4 1.2 $ .3 .2 .1
S .2 .1 .1 $- - -
S .1 .1 -
1.4 8.3 .1 1.4
.1 .6 - s.
.8
As ft of Salest
Division Contribution Oross Profit BARS $ Sales/S investment
5.0 15.5 10.5 1.18
2.8 13.7 10.9
.94
(2.2)
4.6 10.1
.78
.3 9.7 8.1 16.4 7.8 6.7 .89 3.05
Selling Price/lb Cost of Bales/lb
$.116 $.093
.122 .105
.121 .115
.120 .120 .110 .101
Capacity - MM lbs Excess Internal Use Sales
95.6 80.6
-
15.0
97.4 36.1
-
11.3
97.4 87.4
-
10.0
69.1 57.3
-
11.8
69.1
-
69.1
The protein product line'* sole outlet is adhesive* for interior
plywood glue* and is not expected to survive the next two year*.
The plywood Industry seems earnestly bent on converting to synthetic
resin*. Protein glues will be held in the product line until they
are no longer incrementally profitable.
.
-US'
0633321
WATER PCB-00039813
sm-sx ($ in Millions)
Gross Invest, - Sales Internal Use Total
Actual_______ 1961, 1962 ilil
$ 14.3
$? 14.3
13.4 *-
13.4
14.S -
14.5
1964 Budget Cap'tv
13.7 -
13.7
15.3
-
15.3
For Sales i % KOI (after tax)
Salas Gross Profit SAKE Other Income Division Contribution
As % of Salesi Division Contribution Gross Profit SANS
$ Sales/6 Investment
18.7
9 19.2 $ 6.7 $ 1.1 99 5.6
21.3
17.3 6.7 .9 .2 6.0
15.8
16.6 9.4 .9 .3 4.8
30.8 36.6
5.9 1.27
34.6 39.9
5.3 1.29
28.7 32.6
9.9 1.19
15.2
14.6 4.8 .9 .3 4.2
28.7
24.1 9.6 1.1 .3 8.8
28.5 33.0
6.2 1.07
36.3 39,8
4.5 1.58
Selling Price/sq.ft. Cost of Sales/sq.ft,
$ .144 9 .091
.151 .092
.147 .099
,143 .144 .096 .087
Capacity - MM sq.ft. Excess Internal Use
Sales
317.7 191.6
-
126.1
301.2 186.1
-
115.1
181.7 68.9
-
112.8
167.2 69.2
-
102.0
167.2
-
-
167.2
Saflex profitability is heavily dependant on the automotive industry. Although production of automobiles haa increased in the period reviewed, a significant reduction in the quantity of plastic interlayer safety glass used per automobile has resulted in a lowering of sales volume and profitability in Eaflex.
The drop in return on investment in 1963 is overstated due to revised basis of costing raw materials (Butvar rasin) because of the acquisition of Shawinigan Resins and the changes in reusable scrap values.
Though not included in the 1964 budget, it is hoped that glase laminators will convert from 19 gauge plastic to 30 gauge hi$rh-impact plastic for windshields. When this might occur is not known but the change could result in an increase in profit by as much as $1.5MM.
-1160633922
PLTftOH FILM ($ in Millions)
dross Invent. - Sales Internal Use Total
Actual
1961 mi mi
$ 8.4
$$ 8.4
7.6.
-
7.6
8.6 -
8.6
1964 u&S Cap'tv
9.2 9.5
--
9.2 9.5
For Salesi % ROt (after tax)
(.4) (.4) (.3)
<.9> 1.6
Sales dross Profit SARE Other Income Division Contribution
As % of Salesi Division Contribution Gross Profit SARE
$ Sales/5 investment
$ 5.1 $ .4 $ .5 S-
S (.1)
5.0 .3 .4 -
(.1)
5.7 .3 .4
(.1)
6.1 .2 .4
(.2)
7.7 .7 .4
.
.3
(1.4) 8.3 9.7 .61
(.9) 6.4 8.1 .65
(1.0) 5.3 6.4 .66
(2.9) 3.3 6.2 .6$
4.0
9.6 5.7 .81
Selling Price/lb Coat of Sales/lb
S.386 $.354
.344 .322
.306 .290
.307 .307 .297 .278
Capacity - MM lbs Excess Internal Use Bales
17.0 3.8
-
13.2
14.5 -
-
14.5
23.2 4.5 *
18.7
25.0 5.3
-
19.7
25.0
-
-
25.0
Improved operating efficiency and higher sales volumes are offset ting declining selling prices and the effect of the chocolate Bayou start-up. Raw material costs are continuing to rise also, although this condition is not.reflected in selling prices. He foresee a firming of our markets but true price stability is not to be expected.
Two or three new film products have been successfully developed in
our laboratories. These will be further improved and introduced as
part of our profit improvement program. Our available technical resources have been devoted mainly to the development of these new products.
-117-
0633623
WATER PCB-00039815
SHAWISIOAS SES:tJ3
Divisions profitability has been i>MMa)
% Return on Investment AT
Gross Investment
Sales
Division Contribution BT Div. Cent, as % of Sales $ Sales/S Investment
1961
3.0 28.7 21.7
1.8 8.3 .76
Actual 1262
3.5 30.1 22.7
2.3 10.1
.75
1963
6.0 33.0 25.0
4.2 16. e
.76
1964 Budget
6.8 36.0 26.4
4.9 18.7
.73
In 1963 Investment in the divisions products earned the following rates of return:
Loss 0 to 3% 3 to 5.8% Cver 5.8%
% M. Investment
22.1
19, 7
-0-
58.2
Major products reported are.
Butvar Product Group Formvar Product Group Gelvs EmulBion Gelvatol Product Group
Page
119 120 121 122
These comprise 91% of the divisions' investment in 1961.
1180633524
WATER PCB-00039816
BUTVAR PRODUCT GROUP ($ in Millions)
Gross invest. - Sales Internal Use Total
Actual 1961 1962 mi
$14.6
$$14.6
14.9 -
14.9
15.4 -
15.4
------- "S3 Budget cap'tv
15.9 -
15.9
18.3 -
18.3
For Sales* $ ROI (after tax)
5.2 6.2 10.2 10.6 18.2
Sales Gross Profit SAMS Other Income Division Contribution
As X of Salssi Division Contribution Gross profit SAMS
$ Salee/$ Investment
$ 9.0
$ 2.3 $ .7
$$ 1.6
9.3 10.6 2.7 4.0
.8 .7 *-
1.9 3.3
10.5 4.1 .7
-
3.4
17.6 7.5 .8 -
6.7
17.6 25.1
7.5 .62
20.7 29.0
8.3 .63
31.0 37.9
6.8 .69
31,8 38.9
7.1 .66
37.9 42.7
4.8 .96
Selling Prlee/lb - Butvar SG Spec,Butvara
Cost of Sales/lb - Butvar SG Spec.Butvars
$.611 $1.02
$.561 $.756
.811 1.00 .530 .771
.806 1.01 .485 .525
.785 1.01 ,464
.509
.785 1.01 .414 .517
Capacity - MM lbs Excess Internal Dee Sales
18.2 9.0 -
9.2
16.0 6.2 -
9.8
14.4 3.4 -
11.0
18.6 7.4 -
11.2
18.6 -
-
18.6
Price of so Butvar supplied to Saflex was reduced by three cents per pound on 10/1/63, This reduction reflects the sharp decline in price of vinyl acetate monomer - from 14 cents per pound at beginning of 1963 down to 12.5 cents par pound by year-end. With about 1-1/2 lbs of vinyl acetate used per pound of Butvar, the price of this raw material is art important factor.
Increased Mobel sales, high level of automobile activity, cost savings stemming from Trenton plant efficiencies - all these have combined to produce a very favorable trend in division contribution of this product group.
Introduction of HI Saflex in some of the 1965 model autos will mate rially raise sales quantities and will further improve profitability of this product.
119-
0633525
FORMVAR PRODUCT GROUP ($ in Millions)
Gross Invest. - sales Internal Use Total
For Salasi % BOX (after tax)
Sales Gross Profit 8ARE Other income Division contribution
As % of Salesi Division contribution Gross Profit BARS
$ ales/$ Investment
1361 $ 3.0
$$ 3.0
Actual 1962 3.2
-
3.2
1963 3.8 -
3.8
1964
lujjget Cap'tv 4.2 4.8 a.
4.2 4.8
10.8
9 3.7 9 1.2 9 .5 $9 .7
12.6
4.1 1.4
.6
.8
13.2
4.0 1.4
.4
1.0
12.3
3.9 1.4
.4
1.0
17.7
5.3 2.1
.4
1.7
1S.0 31.0 12.9 1.24
20.3 34.4
14.1 1.29
25.8 35.3
9.5 1.07
26.5 36.2
9.7 .93
32.2 40.5
8.3 1.10
Selling Frice/lb (1) Cost of Sales/lb (1)
$.830 $.537
.816 .518
.829 .516
.619 .819 .502 .465
Capacity - MM Lbs
Excess Internal Use Sales
6.0 6.3 6.0 1.8 1.6 1.5
---
4.2 4.7 4.5
6.0 6.0 1.6 -
--
4.4 6.0
(1) Average of Product Group excluding By-Products.
Strong acceleration of export sales of this product group has more than offset the decline in domestic use of Formvars. The product is a mature one and, undeniably, a profitable one.
Again, the decline in price of vinyl acetate monomer (discussed in Butvar Product Group) is an important consideration in the rise in divi sion contribution of this product group. For each pound of Formvar produced, about 1.7 pounds of vinyl acetate monomer are used.
Capital appropriation requests, presently under considerstion, are expected to reduce Formvar costs by about three cents per pound. These projects involvei (1) centralised control of Formvar operations and (2) sifting and packing of Formvara.
Continual research efforta in the electrical insulation fiald are designed to broaden the market for this product in the future.
0633526
-120-
OELVA BMUtSIOM (9 in Millions)
arose invest. - Sales Internal Use Total
1,961
) 2.3 9 .1 * 2.4
Actual 1962 2.8 .1 2.9
1963
3.5 .2
3.7
1964
fia3S cap`tv 3.6 3.6 .3 .5 3.9 4.1
For 8aleet X ROI (after tax)
(3.2)
-
.3
2.9 6.0
Sales Gross Profit SAXE Other Inoome Division Contribution
9 3.1 9 .4 9 .6 9 .1 9 (.1)
3.7 .6 .7 .1 -
4.1 .7 .8 .1 -
4.7 5.3 .9 1.2
.8 .8 .1 e.
.2 .4
As % of Sales Division Contribution Orose Profit SAXE
9 Sales/9 investment
(4.9) 13.4 20.0 1.34
.1 16.S 17. S 1.31
.6 17.6
18.7 1.18
4.3 19.7
16.4 1.32
8.2 22.5 15.2 1.46
Belling Price/lb Cost of Sales/lb
$.172 9.149
.173 .144
.174 .143
.169 .136
.169 .131
Capacity - MM lbs Excess
Internal Use Sales
23.4 4.3 1.0
1B.1
25.2
2,8 .9
21.5
28.5 3.4 1.4
23.7
36.0 5.4 2.6
28.0
36.0 -
4,5 31.5
Mew type* of Rmulalon.(for example, Latex 925, for paper Industry use)
have made an Important contribution to an Improved sales mix for this
product group. Thus, while some grades of Emulsion have suffered price
attrition, the large representation of new and higher-priced types in
the sales mix has maintained a relatively stable selling price over the
years,
'
Unit cost of sales shows a gradual downward trend, principally resultant
from the decline in price of vinyl acetate, of which about one-half pound
la used per pound of Emulsion produced. Although volume of sales shows a
spectacular jump of 55X between 1961 and 1964, departmental fixed or
"period" coats have risen only moderately.
'
The 10K reduction in SAXE personnel, effected in 1963, has enabled this product group as well as those in the other three schedules, to show an improved X to aales relationship.
Low division contribution of this product, shown above, should not be construed ae an indication of abaenoe of profitability nor se. for the Hydrocarbon Division receives a profit on its sale of vinyl acetate to shawlnigan, a profit Whiah significantly tempera this low contribution. This same consideration must be applied to the other product groups.
Continued research effort is expected to provide improvement in division contribution of this product group. Our long-range plans Include a number of additional capacity increases, and possibly a second site of operations in another area.
-121-
0633527
GELVATOL PRODUCT GROUP ($ in Millions)
Gross Invest. - Seles
Internal Use Total
1961 $ 6.3
$ .4 $ 6.7
Actual_______
1962 iiil 6.7 7.3
.6 .7 7.3 8,0
1964
Budget Cap'tv 7.6 8.3 .5 .6 B.l 8.9
For Sales t % ROI (after tax)
(1.5) (4.3) (1.0)
1.7 5.7
Sales Gross Profit SARB Other Income Divieion Contribution
$ 3.9 3.4 3.9
8 .4
-
,5
4.5 6.1 1.0 1.7
9 .6 .6 .6
.7 .7
9-
-
-'
-
$ (.2) (.6) (.1)
,3 1.0
As % of Salesi
Division Contribution Gross Profit BARS 8 Sales/? investment
(5.0) 10.6 15.6
.63
(17.9) .8
18.7 .50
(3.7) 13.5 17.2
.54
5.7 20.8 15.0
.60
15.5 20.2 12.7
.73
Selling Price/lb (1) Cost of Sales/lb (1)
9.628 8.555
.626 .624
.632 .542
.617 .617 .478 .427
Capacity - MM lbs Excbbb Internal Dee Sales
6.0 9.6 9.6 - 4.3 3.4
.4 .4 .4
5.6 4.9 5.8
9.6 9.6 2.5
.5 .6 6.6 9.0
(1) Average of Product Group excluding By-Products,
Price reductiona have been made for certain grade* of thie product, but increaeed sales volume of many of the higher-priced type* ha* hold average selling price to a relatively uniform level.
The greatest single contribution to the impressive downward trend of unit coat of Bales is, of course, the introduction of methyl acetate hydro lysis, estimated to reduce unit cost of production by about four cents per pound. Other important factorsi
1) A sizable Improvement in yield on vinyl acetate monomer, from 92.6% in 1961 to 96.5% in 1964. During thie period, vinyl usage has dropped from 1.94 down to about 1.87 pounds of monomer per pound of Gelvatol.
2) Rate of elngle-line output has increased from 500N to 700M pounds per month between 1961 and 1964.
3} Prices of raw material associated with this product have declined eubetantially, particularly vinyl acetate - from 15.69 at 1/1/61 to 12.59 at 12/31/63.
Division contribution will be converted from $JMMloss in 1963 to $.3MM profit in 1964. Yield on vinyl acetate, aa a result of further coatreduction projects should reach 97-97.5%.
-122-
0633528
GERIHQ mmim
At the time thi# report le published, historical information for individual product* for (Bering and Packaging (Plax) is not readily available.
The record for their total operation follow*. The period covered is that since acquisition of the** companies (? millions)i
QSRIHQ % ROI {after tax)
Gross Investment
Sale*
.
Div. Contribution (before tax)
Actual
1962
1963
2.4
20.4 22.3
1.0
3.0
23.9 23.8
1.5
-JAM-
3.7 26.1 25.5
1.9
% ROI (after tax)
Gross Investment Sales Div. contribution (bafore tax)
- (.2)
_ 50.3 42.0
- (.2)
1.3
51. S 46.6
1.4
0633529 -123-
WATER PCB-00039821
WATER_PCB-00039822