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Huntsman Earnings Miss, Sales Beat

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Chemical company Huntsman Corporation (HUN - Free Report) saw its second-quarter 2013 profit slide as it had to contend with pricing pressure in its titanium dioxide (TiO2) pigment business.  

The Utah-based company posted a profit of $47 million or 19 cents a share in the reported quarter, a 62% year over year plunge. The bottom line was also hit by higher restructuring, impairment and plant closing costs, which jumped nearly six-fold year over year to $29 million in the quarter.

Barring one-time items (including restructuring charges), earnings were 39 cents per share. That trailed the Zacks Consensus Estimate by a penny and fell well below the year-ago adjusted earnings of 61 cents a share.

Revenues fell roughly 3% year over year to $2,830 million in the reported quarter, yet beat the Zacks Consensus Estimate of $2,767 million. Higher sales in the textile effects business was more than masked by declines across polyurethanes, advanced materials and pigments franchises.
Revenues from Huntsman’s core Polyurethanes division inched down 1% year over year to $1,246 million as unfavorable mix more than offset higher average selling prices. Methylene diphenyl diisocyanate (MDI) volumes fell in Europe as a result of the force majeure at the MDI plant in Rotterdam, The Netherlands.

Performance Products segment sales were essentially flat year over year at $777 million as lower average selling prices was offset by better sales mix. Lower raw material costs led to a decline in pricing.

Revenues from the Advanced Materials division clipped 7% to $321 million as lower volume more than offset higher average selling prices. The company saw softer demand and higher competition in the European and India Middle East regions, resulting in lower sales volume. Volume rose in the Americas region on strong demand across aerospace and coatings and construction markets.
The Textile Effects division was the bright spot in the quarter with sales rising 11% to $216 million as higher demand and improved market share led to increased volumes, supported by higher selling prices.

Revenues from the Pigments segment slipped 18% to $334 million in the quarter, hurt by lower pricing which offset higher volumes. Prices declined across the board due to high industry inventory levels. Average selling prices tumbled 26% in the quarter.

Huntsman had cash of $181 million as of Jun 30, 2013, down 61% year over year. Total debt increased marginally year over year to roughly $3.8 billion. Total capital spending for the quarter was $92 million.
Huntsman reaffirmed its capital expenditure guidance for this year which is still expected to be roughly $450 million. Adjusted effective tax rate is forecast to be 35%, higher than 30% in 2012.
Huntsman currently carries a Zacks Rank #3 (Hold).
Other companies in the chemical industry with favorable Zacks Rank are Northern Technologies International Corp. , Eastman Chemical Co. (EMN - Free Report) and PPG Industries Inc. (PPG - Free Report) . All of them carry a Zacks Rank #2 (Buy).

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