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Huntsman posts stable results in Q3

07
Nov '08
Revenues from continuing operations for the three months ended September 30, 2008 increased to $2,730.5 million from $2,423.8 million during the same period in 2007. Revenues increased in all of our segments primarily due to higher average selling prices, while sales volumes were higher in Polyurethanes.

For the three months ended September 30, 2008, EBITDA was $165.0 million as compared to $7.9 million in the same period in 2007. Adjusted EBITDA from continuing operations for the three months ended September 30, 2008 was $193.9 million (including the negative affect of approximately $49 million of costs and lost profit margins) as compared to $240.2 million for the same period in 2007.

Polyurethanes:
The increase in revenues in the Polyurethanes segment for the three months ended September 30, 2008 compared to the same period in 2007 was due to higher average selling prices and higher sales volumes. MDI average selling prices increased 6% primarily due to global price increase initiatives and in Europe primarily due to the strength of foreign currencies versus the U.S. dollar.

MDI sales volumes decreased 2%, as growth in Europe was strong but more than offset by lower volumes in the U.S. due to Hurricanes Gustav and Ike and lower volumes in Asia following government imposed restrictions in China. PO and co-product MTBE average selling prices increased primarily due to improved market demand and higher raw material costs, while sales volumes decreased due to the effect of Hurricanes Gustav and Ike.

The decrease in EBITDA in the Polyurethanes segment was primarily the result of the impact of Hurricanes Gustav and Ike, higher raw material costs and energy costs. In urethanes, higher MDI selling prices were more than offset by higher costs for raw materials such as benzene, natural gas, propylene, ammonia and caustic soda as well as increased fixed manufacturing and selling, general and administrative costs due primarily to the strength of the Euro versus the U.S. dollar.

PO and co-product MTBE margins decreased primarily due to the impact of Hurricanes Gustav and Ike, which more than offset higher average selling prices. We estimate the financial impact including unabsorbed costs, repairs and lost profit margin of Hurricanes Gustav and Ike to be approximately $39 million in the third quarter of 2008 in our Polyurethanes division.

Materials and Effects:
The increase in revenues in the Materials and Effects segment for the three months ended September 30, 2008 compared to the same period in 2007 was primarily due to higher average selling prices. Average selling prices increased by 13% as average selling prices increased in both advanced materials and textile effects due to the strength of major European currencies versus the U.S. dollar and price increase initiatives in certain markets and regions.

Total sales volumes decreased 9%, advanced materials sales volumes decreased by 4% primarily as a result of lower demand in Europe, textile effects sales volumes decreased by 18% primarily as the result of lower demand for dyes and chemicals in all regions. The advanced materials business contributed $385.4 million in revenues for the three months ended September 30, 2008, while the textile effects business contributed $228.6 million in revenues for the same period.


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