Huntsman Profit Jumps on Demand
Huntsman's quarterly profit beat Wall Street's expectations by a wide margin due to higher prices for chemicals used in insulation and paint, sending the company's shares up more than 11%.
The results show that demand is beginning to pick up in key markets Huntsman serves, including clothing, housing, construction and auto production.
For the rest of the year, the company will keep costs low, pay down debt and boost margins, Chief Executive Officer Peter Huntsman said on a conference call with investors.
"I feel better about our prospects for 2012 then I did three months ago," Huntsman said. "We are not just determined to have an improvement in the quantity of our earnings, but the quality as well."
The company posted first-quarter net income of $163 million, or 68 cents per share, compared with $62 million, or 26 cents per share, a year earlier.
Excluding a loss from discontinued operations and other one-time items, earnings came to 74 cents per share. By that measure, analysts on average had expected 40 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 9% to $2.91 billion. Analysts had expected $2.81 billion.
The company has no current plans to raise its dividend - the stock's yield is roughly 2.5% - or buy back shares due to a focus on boosting its credit rating, Chief Financial Officer Kimo Esplin said in an interview.
The company had about $1.11 billion in cash and unused borrowing capacity at the end of the first quarter. Both the Standard & Poor's and Moody's rating agencies rate Huntsman's bonds as junk grade.
"We will not return cash directly to shareholders through a dividend increase or a share buyback until we reach those statistics," Esplin said.
Polyurethane strength
Revenue rose 17% to $1.22 billion in the company's biggest unit, polyurethanes, largely due to higher prices and demand for methylene diphenyl diisocyanate, also known as MDI.
MDI is commonly used in foam insulation.
Across the company, revenue rose 15% in Europe. Most of that jump was due to strong sales of MDI in northern Europe, Esplin said.
"We've really seen a bifurcated Europe, between north and south," he said. "Fortunately, we have a much-higher weight to northern Europe."
Demand was strong across the company for titanium dioxide, a white paint pigment. Revenue in the pigments unit rose 16% to $424 million. DuPont rivals Huntsman in the titanium dioxide market.
As prices for titanium ore continue to rise, Huntsman is confident it will be able to raise prices on titanium dioxide, Esplin said.
Demand slipped slightly for Huntsman chemical dyes and specialty chemicals.
Former U.S. Republican presidential candidate Jon Huntsman Jr., son of the company's founder and brother of its chief executive, joined the board in February.
