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Huntsman Releases 2008 Fourth Quarter and Full Year Results - Fourth Quarter Net Income of $598 Million, Available Liquidity of $1.3 Billion

Published on 2009-03-09. Author : SpecialChem

THE WOODLANDS, TX -- Peter R. Huntsman, our President and CEO, stated: "The fourth quarter of 2008 was perhaps the most challenging in the history of our industry and we acted swiftly to assure our long term prosperity. We negotiated one of the largest out of court settlements and collected $1 billion from Hexion and Apollo to settle our ongoing litigation against them and we continue to pursue a multi-billion dollar lawsuit against Credit Suisse and Deutsche Bank. We recently announced the closure of our Grimsby, UK TiO2 facility while at the same time temporarily suspending operations in a number of our other facilities to effectively manage the drop in demand we experienced during the quarter. We also announced the elimination of 1,250 positions, nearly 10% of our work force, whereby we expect to save approximately $150 million."

Mr. Huntsman continued, "All of our business divisions have seen an increase in demand since December 2008. With strong liquidity, lower costs and unfettered control of our business, we believe that we are in a unique position to focus on our business and prosper during these challenging global conditions."

Three Months Ended December 31, 2008 as Compared to Three Months Ended December 31, 2007 Revenues for the three months ended December 31, 2008 decreased to $2,048 million from $2,504 million during the same period in 2007. Revenues decreased in all of our segments primarily due to lower sales volumes, partially offset by higher average selling prices in Materials and Effects, Performance Products and Pigments.

For the three months ended December 31, 2008, EBITDA was $984 million as compared to $102 million in the same period in 2007. Adjusted EBITDA from continuing operations for the three months ended December 31, 2008 was $51 million as compared to $195 million for the same period in 2007.

Polyurethanes

The decrease in revenues in the Polyurethanes segment for the three months ended December 31, 2008 compared to the same period in 2007 was due to lower sales volumes and lower average selling prices. MDI sales volumes decreased 13% primarily due to lower volumes in the U.S. and Europe related to lower auto and construction-related demand as well as production outages caused by the third quarter 2008 U.S. Gulf Coast Storms. These lower volumes were partially offset by modest growth in Asia. MDI average selling prices decreased 5% primarily due to the strength of the U.S. dollar versus foreign currencies in Europe and the sharp decline in market demand. PO and co-product MTBE sales volumes decreased due to production outages caused by the U.S. Gulf Coast Storms in the third quarter, while average selling prices decreased primarily due to the decline in market demand and lower MTBE raw material costs. The decrease in EBITDA in the Polyurethanes segment was primarily the result of lower margins related to higher valued raw material costs progressing through cost of sales, decreased volumes resulting from the overall economic slowdown, customer destocking and the lingering effects of the third quarter U.S. Gulf Coast Storms. In addition, we recognized a write-down of certain inventories to lower of cost or market values for $16 million.

Materials and Effects

The decrease in revenues in the Materials and Effects segment for the three months ended December 31, 2008 compared to the same period in 2007 was primarily due to lower sales volumes, partially offset by higher average selling prices. Total sales volumes decreased 24%, advanced materials volumes decreased 18% primarily due to lower demand in the automotive, electronics, construction and coatings markets, and textile effects sales volumes decreased 33% primarily due to lower demand in apparel, home textiles and specialty textile markets. Total average selling prices increased 1%, advanced materials average selling prices were essentially unchanged, and textile effects average selling prices increased 3%. The advanced materials business contributed $301 million in revenues for the three months ended December 31, 2008, while the textile effects business contributed $169 million in revenues for the same period. The decrease in EBITDA in the Materials and Effects segment was primarily due to lower sales volumes resulting from the overall economic slowdown, customer destocking and higher valued raw material costs progressing through cost of sales. The advanced materials business contributed $21 million of EBITDA for the three months ended December 31, 2008, while the textile effects business incurred a loss of $40 million.

Performance Products

The decrease in revenues in the Performance Products segment for the three months ended December 31, 2008 compared to the same period in 2007 was primarily due to a 21% (excluding tolling) decrease in sales volumes, partially offset by a 22% increase in average selling prices and higher tolling revenues. Sales volumes (excluding tolling), decreased across most all product lines primarily due to the overall economic slowdown, customer destocking, and the conversion of most of our ethylene glycol business to a toll manufacturing operation in 2008. Sales volumes for our surfactants were the most resilient, in fact, surfactant volumes sold into agricultural applications increased in the 2008 period. Average selling prices increased from price increase initiatives in response to higher raw material costs. The increase in EBITDA in the Performance Products segment was primarily due to higher contribution margins resulting from higher selling prices and lower raw material costs.

Pigments

The decrease in revenues in the Pigments segment for the three months ended December 31, 2008 compared to the same period in 2007 was primarily due to a 38% decrease in sales volumes partially offset by a 10% increase in average selling prices. Sales volumes decreased primarily due to the overall economic slowdown and customer destocking. The decrease in EBITDA in the Pigments segment was primarily due to lower sales volumes and higher valued raw material costs progressing through cost of sales.

Discontinued Operations

On November 5, 2007, we completed the sale of the assets that comprise our U.S. base chemicals business to Flint Hills Resources. On August 1, 2007, we completed the sale of the majority of the assets that comprise our Polymers segment to Flint Hills Resources. Results from these businesses have been classified as discontinued operations.

Corporate and Other

Corporate and other items include the results of our Australia styrenics business, unallocated foreign exchange gains and losses, unallocated corporate overhead, loss on the sale of accounts receivable, losses on the early extinguishment of debt, merger associated income and expense, minority interest, unallocated restructuring costs, gain and loss on the disposition of assets, the extraordinary gain on the acquisition of a business and other non-operating income and expense. In the fourth quarter of 2008, the total of these items was a gain of $735 million compared to a gain of $17 million in the 2007 period. The increase in EBITDA from these items was primarily the result of an $820 million increase in the income associated with the Hexion merger ($815 million of income recorded in the 2008 period compared to $5 million of expense in the 2007 period).

Income Taxes

During the three months ended December 31, 2008, we recorded $148 million of income tax expense compared to $3 million of income tax benefit in the comparable period of 2007. During the fourth quarter of 2008, we recorded income tax expense on the receipt of the settlement payments (net of merger related expenses) along with income tax expense due to our inability to record a tax benefit for losses in certain tax jurisdictions, partially offset by favorable tax authority dispute resolutions. As of December 31, 2008, we have fully utilized all of our U.S. federal regular tax net operating loss carryforwards. We continue to have net operating loss carryforwards in many of our other significant tax jurisdictions.

About Huntsman:

Huntsman is a global manufacturer and marketer of differentiated chemicals. Its operating companies manufacture products for a variety of global industries, including chemicals, plastics, automotive, aviation, textiles, footwear, 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 today has more than 12,000 employees and operates from multiple locations worldwide. The Company had 2008 revenues of approximately $10 billion.

Forward-Looking Statements:

Statements in this release that are not historical are forward-looking statements. These statements are based on management's current beliefs and expectations. The forward-looking statements in this release are subject to uncertainty and changes in circumstances and involve risks and uncertainties that may affect the company's operations, markets, products, services, prices and other factors as discussed in the Huntsman companies' filings with the U.S. Securities and Exchange Commission. Significant risks and uncertainties may relate to, but are not limited to, financial, economic, competitive, environmental, political, legal, regulatory and technological factors. In addition, the completion of any transactions described in this release is subject to a number of uncertainties and closing will be subject to approvals and other customary conditions. Accordingly, there can be no assurance that such transactions will be completed or that the company's expectations will be realized. The company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by applicable laws.

Source: Huntsman


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