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Huntsman Declares its Q3 Results for 2011 to be the Strongest in its History

Published on 2011-11-09. Author : SpecialChem

The WOODLANDS, TX -- Huntsman Corporation reported third quarter 2011 results with revenues of $2,976 million and Adjusted EBITDA of $345 million.

Peter R. Huntsman, the President and CEO, commented: "The third quarter was the strongest in the company's history. The revenues, adjusted EBITDA and adjusted net income are all stronger than a year ago as they appear to be heading towards a record year. This past quarter we announced large restructuring plans to mitigate the impact of the strong Swiss Franc and to address the challenging business conditions of the global textile industry. We expect to record cash restructuring charges of approximately $135 million and expect annual benefits of approximately $90 million between the Textile Effects business and the Swiss based Advanced Materials divisions. We expect to see the impact of these changes beginning in the first quarter of 2012. As satisfied as we feel about the strong quarter, we are still mindful of the sluggish global business conditions. As the economy gradually improves in the coming year, we fully expect stronger earnings from the business as many of the larger product lines are still quite some distance from their peak earnings potential. In short, I am quite pleased with the third quarter results, but expect stronger performance as the global economy returns to more stable growth."

Segment Analysis for 3Q11 Compared to 3Q10

Polyurethanes
The increase in revenues in the Polyurethanes division for the three months ended September 30, 2011 compared to the same period in 2010 was due to higher average selling prices and higher MDI sales volumes. Average MDI selling prices increased primarily in response to higher raw material costs, improved demand and the strength of European currencies against the U.S. dollar. Average PO/ MTBE selling prices increased primarily in response to higher raw material costs. MDI sales volumes increased primarily due to improved demand in the insulation, furniture and automotive sectors but were offset by lower PO/MTBE sales volumes. The increase in Adjusted EBITDA was due to higher contribution margins partially offset by higher manufacturing and selling, general and administrative costs.

Performance Products
The increase in revenues in the Performance Products division for the three months ended September 30, 2011 compared to the same period in 2010 was primarily due to higher average selling prices. Average selling prices increased across almost all product groups primarily in response to higher raw material costs and the strength of major European currencies against the U.S. dollar. Sales volumes were essentially unchanged as the positive impact from the consolidation of the Sasol-Huntsman maleic anhydride joint venture during the second quarter 2011 was offset by lower sales volumes of amines and surfactants. The decrease in Adjusted EBITDA was primarily due to a planned maintenance outage at the Port Neches, TX facility which had an approximate $8 million negative impact.

Advanced Materials
The increase in revenues in the Advanced Materials division for the three months ended September 30, 2011 compared to the same period in 2010 was primarily due to higher average selling prices partially offset by lower sales volumes. Average selling prices increased primarily in response to higher raw material costs and the strength of major European currencies against the U.S. dollar. Sales volumes decreased in the base resins business partially offset by a modest increase in combined sales volumes in the core formulation systems and specialty components businesses. The decrease in Adjusted EBITDA was primarily due to lower contribution margins and approximately $7 million of negative foreign currency impact primarily due to the stronger Swiss franc on the manufacturing and selling, general and administrative costs.

Textile Effects
The decrease in revenues in the Textile Effects division for the three months ended September 30, 2011 compared to the same period in 2010 was primarily due to lower sales volumes partially offset by higher average selling prices. Sales volumes decreased due to lower demand. Average selling prices increased primarily due to the strength of major currencies against the U.S. dollar. The decrease in Adjusted EBITDA was primarily due to lower sales volumes and approximately $10 million of negative foreign currency impact primarily due to the stronger Swiss franc on the manufacturing and selling, general and administrative costs.

Pigments

The increase in revenues in the Pigments division for the three months ended September 30, 2011 compared to the same period in 2010 was due to higher average selling prices partially offset by lower sales volumes. Average selling prices increased in all regions of the world primarily as a result of higher raw material costs and the strength of major European currencies against the U.S. dollar. Sales volumes decreased primarily due to lower finished goods inventory available for sale and lower global demand. The increase in Adjusted EBITDA in the Pigments division was primarily due to higher contribution margins partially offset by lower sales volumes and higher manufacturing and selling, general and administrative costs.

Corporate, LIFO and Other
Corporate, LIFO and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt and unallocated restructuring costs. Adjusted EBITDA from Corporate, LIFO and other decreased by $6 million to a loss of $50 million for the three months ended September 30, 2011 compared to a loss of $44 million for the same period in 2010. The decrease in Adjusted EBITDA was primarily the result of a $7 million increase in LIFO inventory valuation expense ($8 million of loss in 2011 compared to $1 million loss in 2010).

Income Taxes
During the three months ended September 30, 2011 they recorded income tax expense of $55 million compared to $41 million in the same period in 2010. the adjusted effective income tax rate for the three months ended September 30, 2011 was approximately 38%. They have tax valuation allowances in countries such as Switzerland and the United Kingdom where the Textile Effects and Pigments businesses have meaningful operations. The increase in forecasted losses in Switzerland from the Textile Effects business during the third quarter, along with other changes in the geographic mix of income, had the effect of increasing the projected effective income tax rate for the year. They are required to adjust the third quarter year-to-date tax rate to the expected full year rate. This resulted in the recognition of more tax expense during the third quarter. They expect the long term effective income tax rate to be approximately 30 - 35% and expect the fourth quarter and full year 2011 adjusted tax rate to be slightly less than that. During the three months ended September 30, 2011 They paid $49 million in cash for income taxes. They expect the cash tax rate to continue to be less than the effective income tax rate.

Liquidity, Capital Resources and Outstanding Debt
As of September 30, 2011, they had $1,024 million of combined cash and unused borrowing capacity compared to $1,434 million at December 31, 2010. The decrease from 2010 year end was primarily attributable to an increase in primary net working capital of $506 million.

During the third quarter of 2011, they redeemed approximately $111 million of the senior subordinated notes due 2015. On November 1, 2011, They provided notice to redeem all of the remaining 6.875% senior subordinated euro notes due 2013 worth approximately $93 million.

Total capital expenditures, net of reimbursements for the three months ended September 30, 2011 were $93 million compared to $54 million for the same period in 2010. They expect to spend approximately $350 million on capital expenditures, net of reimbursements, in 2011.

On August 5, 2011 they announced that the Board of Directors authorized the repurchase of up to $100 million in shares of the common stock. During the third quarter of 2011, They acquired approximately four million shares of the outstanding common stock for approximately $50 million under the repurchase program.

About Huntsman

Huntsman is a global manufacturer and marketer of differentiated chemicals. Their operating companies manufacture products for a variety of global industries, including chemicals, plastics, automotive, aviation, textiles, footTheyar, paints and coatings, construction, technology, agriculture, health care, detergent, personal care, furniture, appliances and packaging. Originally known for pioneering innovations in packaging and, later, for rapid and integrated growth in petrochemicals, Huntsman has approximately 12,000 employees and operates from multiple locations worldwide. The Company had 2010 revenues of over $9 billion.

Source: Huntsman


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