U.S. Huntsman results in the second quarter

U.S. Huntsman results in the second quarter

U.S. reports attractive MDI Margin Growth, Improving Sequential TiO2 Prices and Substantial Improvement in Cash Generation

Second Quarter 2016 Highlights:

•             Net income was USD 94 million compared to USD 39 million in the prior year period and USD 62 million in the prior quarter.

•             Adjusted EBITDA was USD 325 million compared to USD 385 million in the prior year period and USD 274 million in the prior quarter.

•             Diluted income per share was USD 0.36 compared to USD 0.12 in the prior year period and USD 0.24 in the prior quarter.

•             Adjusted diluted income per share was USD 0.53 compared to USD 0.63 in the prior year period and USD 0.37 in the prior quarter.

•             Net cash provided by operating activities was USD 355 million. Free cash flow generation was USD 282 million; we subsequently made a USD 100 million early repayment of debt in July 2016.

Key Figures

Huntsman

Peter R. Huntsman, our President and CEO, commented: “Our management team is focused on three primary strategic financial objectives.  1) Generating more than USD 350 million of free cash flow in 2016. 2) Growing margins and earnings in our downstream differentiated businesses. 3) Separating our TiO2 business through either a strategic combination or a spin-off. “Our second quarter results demonstrate our commitment to these objectives.  I am delighted we generated USD 282 million of free cash flow during the quarter, in part due to our increased focus on inventory management and are on plan to exceed our USD 350 million target. This enabled us to make a USD 100 million early repayment of debt in July. Our MDI margins are expanding, our Performance Products margins are healthy and our Advanced Materials business is maintaining strong margins. We are actively working toward a separation of our TiO2 business with a target of year-end or first quarter 2017. TiO2 selling prices are rising and other business conditions are improving for our Pigments and Additives business. In time, it should be well positioned for our planned separation. “I am encouraged by our second quarter results. We are well on track to successfully accomplish our objectives.”

Segment Analysis for 2Q16 Compared to 2Q15:

Polyurethanes: The decrease in revenues in our Polyurethanes division for the three months ended June 30, 2016 compared to the same period in 2015 was primarily due to lower average selling prices partially offset by higher sales volumes. MDI average selling prices decreased in response to lower raw material costs. MTBE average selling prices decreased primarily as a result of lower pricing for high octane gasoline. MDI sales volumes increased due to higher demand in the Americas and European regions. PO/MTBE sales volumes increased due to the impact of the prior year planned maintenance outage. The increase in adjusted EBITDA was primarily due to the impact of the prior year planned PO/MTBE maintenance outage, estimated at USD 30 million, as well as higher MDI margins and sales volumes, partially offset by lower MTBE margins.

Performance Products: The decrease in revenues in our Performance Products division for the three months ended June 30, 2016 compared to the same period in 2015 was due to lower average selling prices and lower sales volumes.

Average selling prices decreased primarily in response to lower raw material costs and competitive market conditions. Sales volumes decreased primarily due to softer demand in China and oilfield applications as well as competitive market conditions. The decrease in adjusted EBITDA was primarily due to lower margins in our amines, maleic anhydride and upstream intermediates businesses.

Advanced Materials: The decrease in revenues in our Advanced Materials division for the three months ended June 30, 2016 compared to the same period in 2015 was due to lower sales volumes and lower average selling prices. Sales volumes decreased primarily due to soft demand for low value business in our coatings and construction market, partially offset by growth in our aerospace market across all regions. Average selling prices decreased in our Asia Pacific region primarily as a result of competitive pressure in our electrical and wind markets, partially offset by higher average selling prices in our European and Americas regions. Adjusted EBITDA was unchanged as higher contribution margins from lower raw material costs were offset by lower sales volumes.

Textile Effects: The decrease in revenues in our Textile Effects division for the three months ended June 30, 2016 compared to the same period in 2015 was due to lower average selling prices partially offset by higher sales volumes. Average selling prices decreased primarily due to lower raw material costs. Sales volumes increased in key target countries such as Bangladesh and India. The increase in adjusted EBITDA was primarily due to higher contribution margins from lower raw material costs.

Pigments and Additives: The decrease in revenues in our Pigments and Additives division for the three months ended June 30, 2016 compared to the same period in 2015 was due to lower average selling prices, partially offset by higher sales volumes. Average selling prices decreased primarily as a result of competitive pressure however they increased compared to the prior quarter. Sales volumes increased primarily due to increased end use demand. The decrease in adjusted EBITDA was primarily due to lower contribution margins for titanium dioxide.

www.huntsman.com


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