The Woodlands, Texas - First quarter earnings (EBITDA) in the polyurethane division at Huntsman were up 55 percent at $177 million on sales of $1.2 billion, the chemical company said in its 1 May Q1 report. PU sales increased by 17 percent.
The increase in revenues was primarily due to higher average selling prices and higher sales volumes. Average selling prices for MDI (methylene diphenyl diisocyanate) increased primarily in response to improved demand, while PO/MTBE average selling prices increased primarily in response to improved demand and industry supply constraints, Huntsman said.
MDI sales volumes increased as a result of improved demand in all regions and across all major markets with the exception of appliances. PO/MTBE sales volumes increased due to strong demand. The increase in adjusted EBITDA was primarily due to higher contribution margins and higher sales volumes.
In a conference call with analysts, ceo Peter Huntsman said that the company expects to see a gradual tightening of the MDI in the polyurethanes market. He noted that Huntsman believes the market to be running at 90 percent capacity use globally.
"So I think that we're at an interesting inflection point, when it comes to pricing, when it comes to margin expansion. I believe that we'll see a gradual improvement in that MDI profitability throughout the year," he said.
For the company as a whole, Q1 sales were up 9 percent at $2.9 billion. Net income increased to $163 million compared to $62 million in Q1 2011. Adjusted earnings (EBITDA) improved 31 percent to $397 million.
There are still considerable financial benefits forthcoming from our restructuring efforts. Notwithstanding certain economic challenges in various parts of the world, I am most optimistic about our earnings potential," Peter Huntsman commented.
In response to a question about the weakness of the European market during the conference call, the Huntsman executive commented that while southern Europe is having difficulties, the northern part is not suffering in the same way.
"If I look at something like the insulation market… in MDI, in southern Europe, I'm seeing a 21 percent drop in demand in insulation. In northern Europe, I'm seeing a 21 percent growth in northern Europe, and there is a split in our business of about 3:1 northern Europe versus southern Europe."