Huntsman President & CEO pleased with Q2 result

The decrease in adjusted EBITDA was primarily due to lower contribution margins due in part to the change in sales mix from increased base resin sales volumes.  Lower contribution margins were partially offset by lower selling, general and administrative costs as a result of recent restructuring efforts.

Textile Effects

The decrease in revenues in our Textile Effects division for the three months ended June 30, 2012 compared to the same period in 2011 was primarily due to lower average selling prices partially offset by higher sales volumes.  Average selling prices decreased primarily due to the strength of the U.S. dollar against major international currencies and sales mix.  Sales volumes increased due to increased market share in key markets, specifically Asia.  The increase in adjusted EBITDA was primarily due to higher sales volumes and lower manufacturing costs as a result of recent restructuring efforts.

Pigments

The decrease in revenues in our Pigments division for the three months ended June 30, 2012 compared to the same period in 2011 was due to lower sales volumes partially offset by higher average selling prices.  Sales volumes decreased primarily due to lower global demand and continued customer destocking, particularly in the Asia Pacific region. 

Average selling prices increased in all regions of the world primarily as a result of higher raw material costs partially offset by the strength of the U.S. dollar against major international currencies.  The increase in adjusted EBITDA was primarily due to higher contribution margins partially offset by lower sales volumes.

Corporate, LIFO and Other

Adjusted EBITDA from Corporate, LIFO and other increased by $20 million to a loss of $43 million for the three months ended June 30, 2012 compared to a loss of $63 million for the same period in 2011.  The increase in adjusted EBITDA was primarily the result of a $20 million decrease in LIFO inventory valuation expense ($9 million of income in 2012 compared to $11 million of expense in 2011).

Liquidity, Capital Resources and Outstanding Debt

As of June 30, 2012, we had $1,098 million of combined cash and unused borrowing capacity compared to $1,043 million at December 31, 2011.  For the three months ended June 30, 2012, our primary net working capital increased by $104 million.

Total capital expenditures for the three months ended June 30, 2012 were $82 million.  We expect to spend approximately $425 million on capital expenditures in 2012 which approximates our annual depreciation and amortization.

Income Taxes

During the three months ended June 30, 2012 we recorded income tax expense of $65 million.  Our adjusted effective income tax rate for the three months ended June 30, 2012 was approximately 33%.  We expect our long term effective income tax rate to be approximately 30 - 35%.  During the three months ended June 30, 2012, we paid $57 million in cash for income taxes.

Huntsman Corporation