Chem Demand to Benefit from Stimulus Measures - US Huntsman
HOUSTON (ICIS news)--Global chemical industry market indicators showed slight improvement throughout the first quarter due largely to government stimulus packages, providing optimism that the worst of the current market could be over, US chemicals producer Huntsman said on Friday.
“March was a stronger month than January or February,” CEO Peter Huntsman said during an earnings conference call. “The industry appears to have stabilised, and we’re beginning to see some signs of recovery, particularly in China where customers have finished destocking.”
Huntsman posted a net loss of $290m (€217.5m) in the 2009 first quarter, down from a $7m gain in the same period last year due to lower demand across businesses, the company said.
Group sales dropped 33% year on year to $1.69bn, compared with $2.54bn in the first quarter of 2008.
Huntsman's chief executive credited China’s economic stimulus programme with a broad recovery in Asian demand, and said it gave the company optimism that the US economy would also rebound as projects funded through the US stimulus bill roll in over the next several months.
He expressed particular optimism on the future of global demand for methyl di-p-phenylene isocyanate (MDI), which he anticipated increasing due to stimulus spending in China and the US related to energy conservation and green energy projects. MDI is unique in its ability to fill some of those applications, he said.
MDI is a critical component of the company’s polyurethanes segment, which is the largest of its divisions. The segment’s sales dropped 40% in the first quarter, to $600m from $1bn in the prior-year period, as MDI volumes decreased due to the worldwide economic slowdown.
Moreover, MDI selling prices declined as well due to competitive pressures, lower raw material costs and the strength of the US dollar, the company said.
That more than offset increased volumes for propylene oxide (PO) and methyl tertiary butyl ether (MTBE), which had stronger demand in the quarter. As such, the segment recorded an 80% slump in earnings before interest, tax, depreciation and amortisation (EBITDA) to $27m.
Orders in the polyurethanes segment were up marginally across the board in April, Peter Huntsman said.
However, Peter Huntsman cautioned that the company would only be “aggressive” in its polyurethane operating rates in Asia, where demand has shown some signs of recovery. Elsewhere, operating rates would remain at only about 50%, he said.
The company’s performance products division - its second largest segment - showed the least decline, with sales falling 21%, to $500m from $631m. This was due to “continued robust demand” from agricultural chemical products, as well as stable demand for personal care items, Peter Huntsman said.
Huntsman’s advanced materials, textile effects and pigments segments had sales fall by 32%, 37%, and 31%, respectively, all attributable to the global economic slowdown, the company said.
“We’re not waiting for the economy to kick in and improve our earnings,” Peter Huntsman said. “We’re still cutting inventories and costs where we can. We are ahead of our planned $150m cost reduction plan.”
On 17 April, Huntsman said it had obtained a credit agreement waiver with the lenders of a $650m credit facility, providing the company with more liquidity.
The company did not give any specific earnings or sales forecasts for the rest of 2009.
“March was a stronger month than January or February,” CEO Peter Huntsman said during an earnings conference call. “The industry appears to have stabilised, and we’re beginning to see some signs of recovery, particularly in China where customers have finished destocking.”
Huntsman posted a net loss of $290m (€217.5m) in the 2009 first quarter, down from a $7m gain in the same period last year due to lower demand across businesses, the company said.
Group sales dropped 33% year on year to $1.69bn, compared with $2.54bn in the first quarter of 2008.
Huntsman's chief executive credited China’s economic stimulus programme with a broad recovery in Asian demand, and said it gave the company optimism that the US economy would also rebound as projects funded through the US stimulus bill roll in over the next several months.
He expressed particular optimism on the future of global demand for methyl di-p-phenylene isocyanate (MDI), which he anticipated increasing due to stimulus spending in China and the US related to energy conservation and green energy projects. MDI is unique in its ability to fill some of those applications, he said.
MDI is a critical component of the company’s polyurethanes segment, which is the largest of its divisions. The segment’s sales dropped 40% in the first quarter, to $600m from $1bn in the prior-year period, as MDI volumes decreased due to the worldwide economic slowdown.
Moreover, MDI selling prices declined as well due to competitive pressures, lower raw material costs and the strength of the US dollar, the company said.
That more than offset increased volumes for propylene oxide (PO) and methyl tertiary butyl ether (MTBE), which had stronger demand in the quarter. As such, the segment recorded an 80% slump in earnings before interest, tax, depreciation and amortisation (EBITDA) to $27m.
Orders in the polyurethanes segment were up marginally across the board in April, Peter Huntsman said.
However, Peter Huntsman cautioned that the company would only be “aggressive” in its polyurethane operating rates in Asia, where demand has shown some signs of recovery. Elsewhere, operating rates would remain at only about 50%, he said.
The company’s performance products division - its second largest segment - showed the least decline, with sales falling 21%, to $500m from $631m. This was due to “continued robust demand” from agricultural chemical products, as well as stable demand for personal care items, Peter Huntsman said.
Huntsman’s advanced materials, textile effects and pigments segments had sales fall by 32%, 37%, and 31%, respectively, all attributable to the global economic slowdown, the company said.
“We’re not waiting for the economy to kick in and improve our earnings,” Peter Huntsman said. “We’re still cutting inventories and costs where we can. We are ahead of our planned $150m cost reduction plan.”
On 17 April, Huntsman said it had obtained a credit agreement waiver with the lenders of a $650m credit facility, providing the company with more liquidity.
The company did not give any specific earnings or sales forecasts for the rest of 2009.
quoted from: www.ICIS.com
