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Huntsman (HUN) Q4 Earnings Miss, Revenues Beat Estimates

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Huntsman Corporation (HUN - Free Report) reported net loss of $315 million or $1.43 per share in fourth-quarter 2018, against net income of $287 million or $1.00 in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 52 cents in the quarter. The figure missed the Zacks Consensus Estimate of 55 cents.

Revenues were $2,236 million, up around 1.5% year over year. Also, the figure beat the Zacks Consensus Estimate of $2,123.2 million.

2018 Highlights

For 2018, the company generated net income of $650 million or $1.39 per share, down from $741 million or $2.61 a year ago. 

Total revenues increased 12.2% year over year to $9,379 million.

Huntsman Corporation Price, Consensus and EPS Surprise

 

Huntsman Corporation Price, Consensus and EPS Surprise | Huntsman Corporation Quote

 

Segment Highlights

Polyurethanes: Revenues in the segment fell around 2% year over year to $1,204 million due to lower MDI average selling prices, partly offset by higher sales volumes.

Performance Products: Revenues in the unit rose 9% to $560 million on the back of higher sales volumes and higher average selling prices.

Advanced Materials: Revenues in the unit increased around 3% to $266 million supported by higher average selling prices.

Textile Effects: Revenues in the division rose roughly 2% to $193 million. Results were driven by higher average selling prices, which was partly offset by lower sales volume along with the impact of a stronger U.S. dollar.

Financials

Huntsman generated free cash flow of $195 million during the fourth quarter, up from $190 million a year ago. As of Dec 31, 2018, it had $1,525 million of total cash and unused borrowing capacity. Long-term debt was $2,224 million, down 1.5% year over year.

The company repurchased around 10.4 million shares worth roughly $276 million in 2018.

Outlook

Per Huntsman, the company continued to expand downstream and differentiated businesses through bolt-on acquisitions and investments. The company also strengthened balance sheet by entering into an expanded $1.2-billion senior unsecured revolver facility. Overall, it delivered one of the strongest quarterly result, despite headwinds like declining crude prices, strong customer destocking arising from seasonal slowdown and economic uncertainties.

Going forward, Huntsman will continue to globalize recent investments. Also, it will focus on the higher growth markets and expand downstream businesses. Moreover, the company will continue to make significant investments to support core long-term growth. This includes building a new MDI splitter at Geismar, LA facility, to support differentiated downstream growth. The company also intends to make additional bolt-on acquisitions as appropriate and maintain a balanced approach to buy back shares. Overall, it expects to generate strong free cash flow in 2019 and boost downstream businesses. 

Price Performance

Huntsman's shares have lost around 28.1% in the past year compared with the industry’s 21.1% decline.



Zacks Rank & Stocks to Consider

Huntsman currently carries a Zacks Rank #5 (Strong Sell).

A few better-ranked stocks in the basic materials space include The Mosaic Company (MOS - Free Report) , Rio Tinto plc (RIO - Free Report) and Israel Chemicals Ltd (ICL - Free Report) . While Mosaic and Rio Tinto currently sport a Zacks Rank #1 (Strong Buy), Israel Chemicals carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Mosaic has an expected earnings growth rate of 24% for 2019. Its shares have rallied 26.5% in a year’s time.

Rio Tinto has an expected earnings growth rate of 5.1% for 2019. The company’s shares have inched up 0.3% in the past year.

Israel Chemicals has an expected earnings growth rate of 11.1% for 2019. Its shares have surged 38.9% in a year’s time.

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