Huntsman sees 1Q Port Neches maintenance

Spanish Market: Petrochemicals
27/10/14

Huntsman is taking its Port Neches, Texas propylene oxide/MTBE plant down for a 60-day turnaround at the start of February, executives said today in a quarterly call with analysts.

The turnaround will result in roughly $90mn worth of lost production that will be made up in earnings over the next five years.

The Woodlands, Texas-based chemical manufacturer reported third quarter earnings rose 11pc to $147mn year-over-year as overall revenue rose 1.4pc to $2.88bn. However, earnings before taxes fell $28mn from the prior year to $356mn, largely attributed to an unplanned outage at Port Neches during the quarter that cost Huntsman roughly $30mn, partially offset by MDI earnings.

"We continue to see growing demand for key products such as MDI polyurethanes, amines, maleic, aerospace composites and environmentally friendly textile dyes and chemicals," chief executive Peter Huntsman said. "Third quarter EBITDA from these products increased more than $30mn compared to the prior year."

North American growth was strong in the third quarter, while European demand was lethargic and only slightly improved in some sectors, Huntsman said on today's call.

Roughly 50pc of the quarter's earnings came from sales in its polyurethane business,which grew 1pc to $1.321bn year-over-year, led by strong results in MDI and epoxy production. Operating rates in its polyurethane business stood near 90pc and higher in North America, in the high 80pc to low 90pc range in Asia, and at the upper 80pc level in Europe, according to chief financial officer J. Kimo Esplin.

The pigments division saw an $8mn revenue increase from 2013 to $318mn in the third quarter as demand from Asia led to higher sales volumes that helped offset lower average selling prices.

Huntsman said the company would consider reducing production capacity in Europe, citing the sluggish economy in that region.

Overall, Huntsman said "price pruning" in the polyurethane business and Huntsman's move to more specialized, high-margin products should stabilize company earnings by 2016.

At the same time, Huntsman is benefiting from recent declines in the energy complex, according to Esplin. Lower costs in raw materials for MDI, epoxy and benzene will be beneficial in terms of capturing margin, he said, adding that he remains "concerned about volatility versus higher or lower oil" prices.

Huntsman expects a 20-25pc seasonal slowdown in fourth quarter earnings, which the company said is standard amid weaker demand and de-stocking at this time of the year.

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Huntsman sees 1Q Port Neches maintenance

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