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Hexion Specialty Chemicals Reports First Quarter 2008 Results: Sales Up 14 Percent

Published on 2008-05-15. Author : SpecialChem

COLUMBUS, Ohio -- Hexion Specialty Chemicals, Inc. has reported its results for the first quarter ended March 31, 2008. Highlights for the first quarter of 2008 include:

  • Revenues of $1.64 billion in 2008 compared to $1.44 billion during the prior year period, an increase of 14 percent.
  • Operating income of $82 million for the first quarter of 2008 versus $104 million for the comparable prior year period. First quarter 2008 operating income was negatively impacted by $17 million in increased raw materials costs and $6 million from a Versatic Acids force majeure.
  • Net loss of $6 million for the 2008 quarter versus net income of $4 million in the first quarter of 2007.
  • Segment EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $154 million in the first quarter of 2008 compared to $170 million during the prior year period, a 9 percent decrease. (Note: Segment EBITDA is a non-GAAP financial measure and is defined and reconciled to Net Income later in this release).
  • Adjusted EBITDA was $678 million for the Last Twelve Month (LTM) period ended March 31, 2008. (Note: Adjusted EBITDA is a non-GAAP financial measure and is defined and reconciled to Net Income later in this release).

"Demand for many of our key specialty products increased compared to 2007 levels," said Craig O. Morrison, Chairman, President and CEO. "Our strong quarterly sales gains reflect an ongoing focus on pricing actions to offset rising raw material costs, continued growth from international markets and our broad product portfolio. In addition, the forest products business of Arkema GmbH, our most recent acquisition, also performed well in its first full quarter of operations within Hexion.

"We are focused on driving year-over-year sales and EBITDA gains. Our first quarter 2008 Segment EBITDA, however, was negatively impacted by $17 million in increased raw materials and $6 million from a Versatic Acids force majeure. We are working diligently to recover these raw material cost increases. We will continue to address the challenging North American market conditions through cost controls, synergy achievement and productivity initiatives, as well as growing our international business, which represents approximately 60 percent of our overall sales."

Synergy Update

As part of its synergy program from the Hexion formation, the Company achieved $6 million in synergies during the first quarter of 2008. As of March 31, 2008, Hexion has achieved $126 million in synergies from its synergy program targeting $175 million in savings. The Company continues to expect to take all actions for its synergy program by the end of 2008.

About Hexion Specialty Chemicals:

Based in Columbus, Ohio, Hexion Specialty Chemicals serves the global wood and industrial markets through a broad range of thermoset technologies, specialty products and technical support for customers in a diverse range of applications and industries. Hexion Specialty Chemicals is controlled by an affiliate of Apollo Management, L.P.

Forward Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, the management of Hexion Specialty Chemicals, Inc. (which may be referred to as "Hexion," "we," "us," "our" or the "Company") may from time to time make oral forward-looking statements. Forward looking statements may be identified by the words "believe," "expect," "anticipate," "project," "plan," "estimate," "will" or "intend" or similar expressions. Forward-looking statements reflect our current views about future events and are based on currently available financial, economic and competitive data and on our current business plans. Actual results could vary materially depending on risks and uncertainties that may affect our markets, services, prices and other factors as discussed in our 2007 Annual Report on Form 10-K, and our other filings, with the Securities and Exchange Commission (SEC). Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: economic factors such as an interruption in the supply of or increased pricing of raw materials due to natural disasters, competitive factors such as pricing actions by our competitors that could affect our operating margins, and regulatory factors such as changes in governmental regulations involving our products that lead to environmental and legal matters as described in our 2007 Annual Report on Form 10-K, and our other filings, with the SEC.

Source: Hexion Specialty Chemicals


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