Huntsman narrows loss

Salt Lake-based Huntsman Corp., which raised $1.45 billion last month in the world's largest public stock sale this year, said Thursday that its fourth-quarter loss narrowed amid soaring prices for basic chemicals.

The net loss narrowed to $1.2 million from $105.6 million a year earlier, Huntsman said in a prepared statement. No per-share results were provided because Huntsman, the world's fourth-largest chemical company, didn't go public until the first quarter, spokesman John Heskett said. Sales rose 32 percent to $3.13 billion from $2.37 billion.

Chief executive Peter R. Huntsman is shutting plants and paying down debt to reduce costs. Restructuring expenses jumped ninefold to $96.9 million. Surging demand helped quadruple profit from basic chemicals, including ethylene, the world's most widely used petrochemical, as prices soared 60 percent.

Results "were better than I expected," Greenwich Consultants analyst Michael Judd said in a telephone interview. "They've been reducing their costs, volumes are higher and prices are higher." He rates the shares "buy."

Shares of Huntsman, the world's largest producer of MDI polyurethane used in foam insulation, fell 35 cents to close at $27.25 on the New York Stock Exchange. The stock has gained 18 percent since the initial public offering on Feb. 11.

"We saw improved results in the commodity segments of our business as global supply and demand conditions continued to come more into balance," Peter Huntsman said in the statement. "We remain optimistic about our outlook for 2005."

Profit excluding taxes, restructuring and other costs rose 81 percent to $401.5 million and will be higher in the first quarter because of improvements in base chemicals and polyurethanes, chief financial officer J. Kimo Esplin told analysts and investors on a conference call.

The company is halfway toward its goal of reducing fixed costs by 10 percent, or $200 million, Peter Huntsman said on the call. "We are confident our target will be met by the end of 2005," he said.

Huntsman's capital spending will jump 76 percent this year, to $400 million from $227 million in 2004, including construction of a polyethylene plant in Wilton, United Kingdom, and a polyurethanes plant in Shanghai, China.

The company last month sold 55.7 million common shares and 5.75 million preferred shares to help trim $6.2 billion in debt to less than $5 billion, Huntsman, 41, said last month in an interview. Net debt should be $4.86 billion after using the share proceeds to redeem high-interest notes, the company said.

Base chemical profit excluding taxes and other items climbed to $71.4 million, from $15.9 million, as chemical supplies tightened, Huntsman said. Revenue rose 61 percent on higher prices, including higher raw material and energy costs.

U.S. average prices for ethylene were 93 percent higher in the quarter than a year earlier, according to data compiled by Bloomberg. Huntsman did not experience the drop in demand reported this quarter by some rivals preceding the Chinese New Year, and demand is rising in March, Huntsman said on the call.

Profit margins on ethylene are rising amid lower raw material costs and flat pricing, he said. A recent uptick in raw material costs should help with second-quarter price negotiations.

Polyurethane profit rose 22 percent to $93.3 million as rising demand boosted prices 32 percent for MDI, or diphenylmethane diisocyanate, a chemical used to make foam for insulation and furniture. Huntsman in 2003 had 24 percent of global MDI sales, making it the largest producer, Fulcrum Global Partners analyst Frank Mitsch said in a Feb. 22 report. Polyurethane sales jumped 31 percent to $760 million.

MDI demand grew 11 percent last year, driven by sales of home insulation, particularly in China, Huntsman said on the call. The industry is sold out of MDI and Huntsman's plants ran at 106 percent of their nameplate capacity, he said.

"We are well-positioned to take advantage of this growth with our new plant in Shanghai," which will open in the third quarter of 2006, Huntsman said.

Profit in polymers climbed 17 percent to $32 million as sales soared 40 percent, to $432 million, on price increases for plastic resins such as polyethylene and propylene.

Profit in performance products, which includes surfactants for detergents, fell 79 percent to $8.1 million as sales jumped 25 percent to $528 million. Profit was reduced $56.3 million by restructuring costs, including the elimination of 320 workers.

Jon Huntsman Sr., the company's billionaire founder and chairman, is the father of the chief executive and of Utah Gov. Jon Huntsman Jr.

For the full year, Huntsman narrowed its net loss to $227.7 million, from a loss of $426.1 million in 2003.

Contributing: Ian Fuchsloch

Copyright C 2005 Deseret News Publishing Co.
Provided by ProQuest Information and Learning Company. All rights Reserved.