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Huntsman Releases 2009 Fourth Quarter and Full Year Results

Published on 2010-02-24. Author : SpecialChem

Revenues for the three months ended December 31, 2009 increased to $2,096 million from $2,048 million for the same period in 2008. Revenues increased primarily due to higher sales volumes in our Polyurethanes, Textile Effects, Performance Products and Pigments segments partially offset by lower average selling prices in our Polyurethanes, Advanced Materials and Performance Products segments.

For the three months ended December 31, 2009, EBITDA was $147 million compared to $984 million for the same period in 2008. Adjusted EBITDA for the three months ended December 31, 2009 was $165 million compared to $51 million for the same period in 2008.

Polyurethanes

The increase in revenues in our Polyurethanes segment for the three months ended December 31, 2009 compared to the same period in 2008 was primarily due to higher sales volumes partially offset by lower average selling prices. Global MDI sales volumes increased primarily due to improved demand. Average MDI selling prices decreased due to lower raw material costs and competitive pressures. PO and MTBE sales volumes increased compared to the 2008 period, which was impacted by the 2008 U.S. Gulf Coast storms, and average selling prices increased due to favorable competitive conditions. The increase in EBITDA in our Polyurethanes segment was primarily the result of higher margins and sales volumes as well as the negative effects in the 2008 period caused by the 2008 U.S. Gulf Coast storms.

Advanced Materials

The decrease in revenues in our Advanced Materials segment for the three months ended December 31, 2009 compared to the same period in 2008 was due to lower sales volumes and lower average selling prices. Sales volumes decreased across all regions as a result of delayed effects from the worldwide economic slowdown on this portion of our business. Average selling prices in our base resins market decreased in response to lower raw material costs while average selling prices in our formulations and specialty components markets decreased primarily as a result of changes in our product mix and competitive pressure in the wind generation and coating systems markets. EBITDA was essentially unchanged as lower sales were offset by lower raw material and operating costs. During the three months ended December 31, 2009 and 2008, our Advanced Materials segment recorded restructuring and plant closing charges of nil and $1 million, respectively.

Textile Effects

The increase in revenues in our Textile Effects segment for the three months ended December 31, 2009 compared to the same period in 2008 was due to higher sales volumes and higher average selling prices. Sales volumes increased primarily due to higher demand for apparel, home and specialty textile products in Asia where the dyeing, printing and cotton knit businesses in China and the woven segment in Sri Lanka are experiencing a good market recovery. The increase in EBITDA was primarily due to higher margins resulting from lower operating and fixed costs as well as higher sales volumes. During the three months ended December 31, 2009 and 2008, our Textile Effects segment recorded restructuring and plant closing credits of $6 million and restructuring and plant closing charges of $21 million, respectively.

Performance Products

The decrease in revenues in our Performance Products segment for the three months ended December 31, 2009 compared to the same period in 2008 was due to lower average selling prices partially offset by higher sales volumes. The decrease in average selling prices was primarily due to lower raw material costs. Sales volumes increased primarily due to higher demand across most product groups. EBITDA decreased due to the effect of lower margins as selling prices decreased faster than raw materials costs, partially offset by higher sales volumes. During the three months ended December 31, 2009 and 2008, our Performance Products segment recorded restructuring and plant closing charges of nil and $1 million, respectively.

Pigments

The increase in revenues in our Pigments segment for the three months ended December 31, 2009 compared to the same period in 2008 was due to higher sales volumes. Sales volumes increased primarily due to greater demand in Europe and Asia. Average local currency selling prices decreased but were offset by the strength of the Euro against the US dollar, resulting in no change to average selling prices. The increase in EBITDA in our Pigments segment was primarily due to higher margins resulting from lower operating and fixed costs as well as higher sales volumes. During the three months ended December 31, 2009 and 2008, our Pigments segment recorded restructuring, impairment and plant closing charges of $6 million and $3 million, respectively.

Corporate and Other

Corporate and Other includes the results of our Australia styrenics business, unallocated foreign exchange gains and losses, unallocated corporate overhead, loss on our accounts receivable securitization program, income (expenses) associated with the terminated merger with Hexion and related litigation, loss on early extinguishment of debt, income (loss) attributable to non-controlling interests, unallocated restructuring costs, extraordinary gain on the acquisition of a business and non-operating income and expense. The decrease in EBITDA from Corporate and Other for the three months ended December 31, 2009 compared to the same period in 2008 resulted primarily from the lack of income associated with the Terminated Merger and related litigations costs in the 2009 period ($815 million in the 2008 period compared to nil in the 2009 period).

Income Taxes

During the three months ended December 31, 2009, we recorded an income tax benefit of $79 million compared to $148 million of income tax expense in the same period of 2008. In the fourth quarter of 2009, as a result of year end pension accounting, we were required to realize the tax benefit for some of the net operating losses in countries where we have valuation allowances in addition we recorded tax benefits from losses in countries where we do not have valuation allowances.

In 2009, we paid cash taxes of approximately $155 million, $15 million related to foreign taxable income and approximately $140 million related to U.S. taxable income approximately all of which was associated with the settlement of our litigation in Texas with Credit Suisse and Deutsche Bank. We have significant non-U.S. net operating loss carryforwards most of which have an offsetting tax valuation allowance. As of December 31, 2009 we have fully utilized all of our U.S. federal regular tax net operating loss carryforwards.

Liquidity, Capital Resources and Outstanding Debt

As of December 31, 2009, we had $2,510 million of combined cash and unused borrowing capacity compared to $1,291 million at December 31, 2008. Excluding cash received from the Texas bank litigation settlement (net of taxes), a portion of which was used to repurchase certain of our long-term debt, our liquidity during 2009 improved despite the impact of the worldwide recession on earnings. This was largely due to effective working capital management, reduced capital expenditures and minimal scheduled debt maturities.

Our primary working capital (accounts receivable, including our off balance sheet securitization program, inventory and accounts payable) decreased which provided a cash benefit to us of $74 million in the fourth quarter of 2009 and $490 million for the full year 2009. Total capital expenditures were $49 million during the fourth quarter of 2009 compared to $93 million for the same period in 2008. For the year ended December 31, 2009, total capital expenditures were $189 million compared to $418 million for 2008. We expect to spend between $250 and $275 million on capital expenditures in 2010.

During the fourth quarter of 2009, we replaced our existing short term (364 day) accounts receivable securitization program that was scheduled to mature November 2009 with two new multi-year securitization programs (a U.S. program and a European program). The U.S. program provides for financing up to $250 million of which $125 million is for three years and $125 million is for two years. The European program provides for financing up to 225 million for two years. Availability under these programs is determined among other things by the level of eligible receivables.

We are currently seeking to amend our existing revolving credit facility to reduce the available borrowing limit to an amount not to exceed $300 million and extend the maturity to February, 2014. In connection with our ongoing insurance claim related to the April 29, 2006 Port Arthur, Texas fire, we have received partial insurance proceeds to date of $365 million. We are currently in binding arbitration with the insurers. While a final ruling is not expected until after additional oral arguments scheduled for March 2010, based on preliminary rulings, we do not expect additional recoveries to exceed $200 million. Any additional anticipated recoveries will be used to repay secured debt.

On January 11, 2010, we repurchased all of our outstanding 7% convertible notes due 2018 which were held by funds controlled by Apollo Management, L.P. The convertible notes were issued to Apollo in December 2008 in connection with the settlement of litigation related to our terminated merger agreement with Hexion Specialty Chemicals, Inc. The total purchase amount was approximately $382 million. At the time of this repurchase, the notes were convertible into approximately 31.8 million shares of Huntsman common stock. This early extinguishment of the convertible notes will result in a loss on extinguishment of approximately $146 million in the first quarter of 2010.

In the future, depending on market conditions, we may from time to time, seek to repurchase or redeem debt securities in open market purchases, privately negotiated transactions, tender offers or otherwise. Any such repurchases or redemptions and the timing and amount thereof, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. No assurance can be given that we will complete any such transaction.

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 has approximately 11,000 employees and operates from multiple locations worldwide. The Company had 2009 revenues of approximately $8 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. 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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