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Chemtura Raises Polyester Polyol Prices

CHMT

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Specialty chemical company Chemtura Corporation (CHMT - Snapshot Report) recently announced that it will raise the prices for its polyester polyols by up to 6% globally. This includes the Fomrez product lines. The move, which is effective September 1, 2012 or as allowed by the contracts, will help the company to counter raw material cost inflation.

Polyester polyols are used to make polyurethanes, which have applications in a host of industries including automotive and construction. Polyurethanes are polymers that are used to make foams.

Chemtura makes and distributes specialty chemical solutions and consumer products globally with annual sales of $3 billion. Its broad range of offerings includes recreational water purification products, petroleum additives, seed treatments, pesticides, bromine and bromine-based products and hot cast elastomers. The company serves a number of industries including agriculture, automotive, building and construction, electronics, packaging, plastics and transportation.

Chemtura reported its second-quarter 2012 results on August 1. Adjusted earnings of 61 cents per share outstripped the Zacks Consensus Estimate of 52 cents. The results were driven by growth across the company’s AgroSolutions and Consumer Products divisions.

Revenues, however, fell 4% year over year to $845 million in the quarter. Weak demand in Asia Pacific coupled with unfavorable currency exchange translation weighed on the top line. Declines across the Industrial Performance Products and Industrial Engineered Products segments were, in part, offset by higher revenues from AgroSolutions and Consumer Products units.

Chemtura has been actively engaged in increasing selling prices to cover rising raw material costs. The company realized roughly $27 million from higher selling prices in the second quarter.

Chemtura expects to deliver year over year growth in the remainder of 2012, aided by an improvement in its distribution channels, continued innovation and a recovery in its Consumer Products segment. The company also bumped up share buybacks by doubling its share repurchase authorization to $100 million.

Chemtura currently retains a Zacks #3 Rank, implying a short-term (1 to 3 months) Hold rating.

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