The Woodlands, Texas -- Huntsman's polyurethanes business had a strong fourth quarter in 2009, with sales volumes up 10 percent, and revenues of $841 million, compared to $796 million in Q4 2008. But for the full year, volumes in polyurethanes were down 5 percent and selling price dropped by 22 percent, with total PU revenues in 2009 of $3005 million, compared to $4055 million in 2008.
Huntsman attributed the increase in revenues in polyurethanes for Q4 primarily to higher sales volumes, partially offset by lower average selling prices. Global sales volumes for MDI (methylene diphenyl diisocyanate) increased, primarily due to improved demand, the company noted.
Huntsman's results statement said the increase in Q4 earnings in polyurethanes was primarily from higher margins and sales volumes, as well as because Q4 in 2008 suffered negative effects from the 2008 US Gulf Coast storms.
Average MDI selling prices decreased due to lower raw material costs and competitive pressures, said Huntsman, noting that for propylene oxide (PO) and MTBE (methyl tert-butyl ether), sales volumes increased compared to 2008's Q4, again from the 2008 US Gulf Coast storm effect, while average PO/MTBE selling prices increased due to favourable competitive conditions.
In a 19 Feb conference call with analysts, Peter Huntsman, company president and ceo, referred to the strong earnings in polyurethanes. "Compared to the prior year, we saw improved demand across all regions as well as increased contribution margins," he said, adding, "Global demand for MDI (methylene diphenyl diisocyanate) increased 12 percent in the fourth quarter compared to the prior year.
Huntsman said that Asia "continues to lead the global recovery, fuelled in part by the Chinese stimulus programmes." Automotive, appliance and coatings have also shown strong increase in demand.
And Huntsman noted, "significant improvement in demand in the Americas," with composite wood products a major driver. Huntsman's largest market, Europe, showed less demand recovery "due to colder than normal weather," although Peter Huntsman noted increases across sectors other than insulation -- automotive, adhesives, footwear, coatings, appliances and furniture.
The Huntsman chief also stressed that it has seen additional market penetration, where MDI continues to replace less competitive alternatives.
He commented that rising benzene costs may constrain margins in the near term, noting that it takes, "about 90 days to work cost through the value chain and on to our customers."
For Huntsman Corp. as a whole, 2009 revenues were nearly 25 percent down at $7763 million compared to $10 215 million in 2008, and earnings (adjusted EBITDA) were $511 million compared to $643 million for 2008.
This gave an adjusted net loss for 2009 of $323 million compared to $57 million for 2008.
Q4 earnings for PO and its co-product MTBE were similar to those in Q3, said Peter Huntsman, noting that PO is the raw material for polyols, which combined with MDI form a polyurethane system. He noted that Huntsman idled its Port Neches, Texas MTBE/PO facility in January 2010, for a turnaround in inspection planned to last until the end of the first quarter.
Looking at the overall Q4 results, Peter Huntsman, said they were "very encouraging," adding that in 2009, the group eliminated more than $150 million of costs from the business and reduced working capital needs by nearly $500 million. In Q4, he said, while sales volume increased 13 percent compared to 2008, they still fell short of normalised demand.
"We look forward to improving market conditions in 2010," said the Huntsman boss, adding, "We have a number of innovative products in our pipeline that address energy concerns that will provide long term benefits."
(Huntsman conference call extracts courtesy of www.seekingalpha.com).
PIC: One of the many diverse uses of MDI -- in sound/vibration absorbing rail pads