The Woodlands, Texas - Huntsman Corp. reported revenues for the fourth quarter of 2008 of $2048 million, a decrease of 18 percent compared to $2504 million for Q4 2007 and a decrease of 25 percent compared to the third quarter of 2008.
During the quarter, volumes of MDI (methylene diphenyl diisocyanate) sold by its polyurethanes division decreased 13 percent, "primarily due to lower volumes in the US and Europe related to lower automotive and construction-related demand as well as production outages caused by the third quarter 2008 US Gulf Coast Storms," said the group's results statement.
But Peter Huntsman emphasised the group's confidence in the long-term good growth prospects for MDI, as recovery happens. He also stressed the unprecedented nature of the drop in MDI sales: in 20 years of quarterly industry history in MDI, he said, there have only been five quarters of negative demand -- none exceeding 5 percent,
Demand in all of its business divisions has increased since December 2008, said Peter Huntsman , in a 26 Feb conference call on the results : "I believe that the worst of industry destocking is now behind us."
With strong liquidity, lower costs and unfettered control of our business, we believe that we are in a unique position to focus on our company and prosper during these challenging global conditions.
Net income for the Q4 2008 was $598 million, compared to net income of $2 million for the same period in 2007 and compared to a net loss of $20 million for Q3 2008.
Adjusted net loss from continuing operations for the Q4 2008 was $91 million compared to adjusted net income from continuing operations of $51 million for Q4 2007.
Adjusted earnings (EBITDA) from continuing operations for Q4 2008 was $51 million compared to $195 million for the same period in 2007 and $194 million for Q3 2008.
Looking at the whole year's results, Huntsman's revenues of $10 215 million, were 6 percent up on the $9651 million for 2007.
Net income for 2008 was $609 million, compared to net loss of $172 million for 2007. Adjusted EBITDA from continuing operations for 2008 was $643 million compared to $926 million for 2007.
In its polyurethanes business, Q4 revenue was $796 million, compared to $989 million in Q4 2007, while earnings were $13 million as opposed to $142 million for the same period of 2007.
During a 26 Feb conference call on the results, Peter Huntsman, president and ceo, said earnings in the PU division for Q4 were impacted broadly by four factors
* Volumes were down as a result of the overall economic slowdown and customer destocking.
* Price decreases primarily as a result of the strength of the Euro against the dollar erosion, lower Asian pricing as well as price pressure from the rapid decline in raw material costs.
* High value raw materials going through the supply chain, due to the lag time it takes to move prices through the value chain.
* Non-recurring items from the lingering effect of Hurricanes Gustav and Ike of $6 million.
* An inventory valuation charge related primarily to a decline in Asian pricing of $16 million.
Peter Huntsman said that, regionally, the largest decline was in the Americas, from further slowing in construction resulting in a decline in production of composite wood products and insulation. In Europe - Huntsman's largest market accounting for nearly half its volume -- sales slowed as a result of extended idling of automotive plants, and construction- and appliance- related customers slowing production as demand dropped, said the ceo.
Volumes in Asia were stable, compared to a slow Q4 last year, he added. In China, volumes were negatively affected by lower exports of appliances and footwear, plus a slowdown in domestic construction.
Peter Huntsman stressed his confidence that MDI and other polyurethane products "continue to have stronger growth than underling GDP growth," as these products continue to replace ones that are "less efficient, more expensive and less environmentally acceptable."
Huntsman is "convinced that MDI insulation will be a major factor in delivering the objectives of the stimulus packages" in the US and China. Insulation is growing at four times the rate of overall construction growth, while MDI-based insulation is growing at double that of other insulation materials, he pointed out.
In furniture uses, Huntsman expects MDI-based formulations to continue to replace TDI-based ones, as a result of lower cost and better comfort. MDI-based adhesives and binders will also continue to grow and replace formaldehyde, he added.