Company News

July 9, 2019

BASF Issues Profit Warning

German Chemical Giant BASF Tumbles After “Shocking” Profit Warning

One of the biggest walls of worry facing the market, now that both the US-China “ceasefire” and the Fed’s dovish reversal are in the rearview mirror, is just how bad the coming earnings season will be. As a reminder, last week we showed using Factset data, that the number of companies issuing negative guidance had risen to the second highest on record.

And if Monday’s guidance cut from German chemical giant BASF is any indication, the wall of worry can’t be high enough as the upcoming earnings season will be nothing short of disaster.

For once Goldman got a prediction right, when on Friday the bank initiated BASF with neutral rating, noting its caution on near-term earnings outlook, and seeing an “increased likelihood of a guidance reduction” going into 2Q. As it turned out, Goldman was spot on, because on Tuesday shares of the German chemical company plunged after it issued what one trader described as a “shocking” profit warning, blaming a slowdown in global economic growth and industrial production, the recession in the global automotive industry and the trade war between the United States and China; the company also blamed adverse weather conditions in the U.S. also hit demand for agricultural products.

As a result, BASF now expects Q2 EBIT of just €500 million, a whopping 60% below consensus expectations. For the full year, BASF expects EBIT before special items to decline by 30%, compared with a previous estimate for growth of between 1% and 10%. The top line gets whacked too as BASF now expects a slight decline in 2019 sales compared with the full year 2018 vs previous forecast of slight sales growth of 1-5%.

The stock plunge hit the entire sector and pressured European stocks across the board. BASF shares were trading 5% lower at €59.43, while peer chemical producers Covestro AG and Wacker Chemie AG both tumbling more than 5%. The chemical industry – the worst-performing sector on the Stoxx Europe 600 – dropped 1.6%.

Wall Street – which of course was caught completely by surprise – was shocked by the announcement with the penguins immediately cutting price targets on the chemical giant:

Morgan Stanley, equalweight; PT EUR77

  • Magnitude of downgrade of earnings was greater than anticipated
  • Expects investors to question FY2020 EBIT expectations, as well as status of balance sheet given co.’s commitment to stable and rising dividend

Jefferies, hold; PT cut to EUR62 from EUR69

  • Would not be surprised if company reprises “visibility is pitch black” theme on 2Q earnings update
  • Also cites the magnitude of the earnings downgrade as key, not the cut itself, noting peer commentary made the earnings outlook change unsurprising

Citi cuts price target to EU75, saying both “size and longevity of the demand shock is way beyond broker’s initial estimates”

  • Says there’s likely an element of “kitchen sinking” this year
  • Calls upon BASF’s management to present a detailed plan to return to growth.
  • Notes higher one-time costs highlight restructuring plan is accelerating
  • Says question is if capex will be cut; “for now,” lower earnings will affect short-term cash- flows and Citi’s valuation

Finally, Bernstein said the warning was “worse than feared” and predicted more pain to come in the second half.

The obvious question is if a relatively stable company, which nobody expected to post such a shocking guidance cut, and which never issued even a peep as to what was coming is in such deep trouble, what does that mean for the rest of publicly traded companies, all of which are subject to the same headwinds? We’ll find the answer next Tuesday when Q2 earnings season officially begins.

https://www.zerohedge.com/news/2019-07-09/german-chemical-giant-basf-tumbles-after-shocking-profit-warning

July 8, 2019

Truck Plunges On Top of Huntsman Polyester Polyol Plant

Woodlands-based Huntsman Corp. stops operations at facility following fatal big rig crash

All Huntsman employees at the petrochemical production facility are uninjured and accounted for.
Author: Joshua Mann – Senior reporter, Houston Business Journal
Published: 11:48 AM CDT July 3, 2019
Updated: 12:20 PM CDT July 3, 2019

THE WOODLANDS, Texas — The Woodlands-based Huntsman Corp. (NSYE: HUN) has halted operations at one of its facilities after an auto accident at the site.

 

A big rig fell from the Houston Ship Channel bridge on 610 East Loop at about 8:30 a.m. July 3, landing on the Huntsman site at 101 Concrete St. below. The driver initially survived the accident but died during rescue attempt.

Meanwhile, all Huntsman employees at the petrochemical production facility are uninjured and accounted for, according to a Huntsman spokesperson.

The site has 47 employees, and it produces polyols — feedstock for a process to make polyurethane insulation further down the value chain — the spokesperson said.

https://www.khou.com/article/news/woodlands-based-huntsman-corp-stops-operations-at-facility-following-fatal-big-rig-crash/285-8527c987-0262-4ca9-a578-e93b93f6198d

 

July 8, 2019

Truck Plunges On Top of Huntsman Polyester Polyol Plant

Woodlands-based Huntsman Corp. stops operations at facility following fatal big rig crash

All Huntsman employees at the petrochemical production facility are uninjured and accounted for.
Author: Joshua Mann – Senior reporter, Houston Business Journal
Published: 11:48 AM CDT July 3, 2019
Updated: 12:20 PM CDT July 3, 2019

THE WOODLANDS, Texas — The Woodlands-based Huntsman Corp. (NSYE: HUN) has halted operations at one of its facilities after an auto accident at the site.

 

A big rig fell from the Houston Ship Channel bridge on 610 East Loop at about 8:30 a.m. July 3, landing on the Huntsman site at 101 Concrete St. below. The driver initially survived the accident but died during rescue attempt.

Meanwhile, all Huntsman employees at the petrochemical production facility are uninjured and accounted for, according to a Huntsman spokesperson.

The site has 47 employees, and it produces polyols — feedstock for a process to make polyurethane insulation further down the value chain — the spokesperson said.

https://www.khou.com/article/news/woodlands-based-huntsman-corp-stops-operations-at-facility-following-fatal-big-rig-crash/285-8527c987-0262-4ca9-a578-e93b93f6198d

 

July 2, 2019

Hexion DeLeverages

Hexion Inc. Completes Balance Sheet De-Leveraging

Business Wire

COLUMBUS, Ohio–(BUSINESS WIRE)–

Emerges from Chapter 11 in a Strong Financial Position to Support Long-Term Growth

Poised to Reinvest in Value-Driving Platform, Led By Differentiated Specialty Chemical Product Portfolio, World-Class R&D, Global Manufacturing Footprint and Sustainable Practices

Hexion Inc. (“Hexion” or the “Company”) today announced that it has successfully completed its balance sheet de-leveraging and emerged from Chapter 11. As a result of this process, Hexion has reduced its debt by more than $2.0 billion, received an infusion of $300 million in equity capital through a rights offering and raised approximately $2.0 billion in exit financing. With a strengthened capital structure and substantial free cash flow after debt service, Hexion is now well-positioned to make substantial reinvestments into its businesses to fuel strategic growth and drive value for its stakeholders.

Throughout the bankruptcy court-supervised process, Hexion’s global operations continued uninterrupted, providing customers with high-quality products and service. The de-leveraging plan has provided for payment in full to the Company’s trade creditors.

“We are moving forward with significantly less debt and greater financial flexibility, which enhances our competitive position and ability to create long-term value for our stakeholders,” said Craig A. Rogerson, President and CEO. “As an appropriately capitalized market leader with substantial free cash flow generation capabilities and a lower interest burden, we will continue to enhance our value-creating platform by accelerating new product development. Our growth strategy will be driven by investments in innovative products using our research and development capabilities and strategic partnerships, capitalizing on our global manufacturing footprint and commitment to sustainability. Going forward, we are well-positioned to take advantage of our operational momentum.”

Mr. Rogerson continued, “Our expedited emergence is a testament to the hard work and dedication of our associates, as well as the continued support of our customers and suppliers around the world. Our entire team is intensely focused on safely and efficiently delivering high-quality products and service for all of our customers.”

Compelling Value Drivers

  • Global specialty chemical company with leading market positions generating strong free cash flow. Hexion is the global leader in Forest Products and Epoxy, Phenolic and Coatings resins, maintaining #1 or #2 market positions representing approximately 80% of sales.
  • Industry-leading Research & Development (R&D) and technical service capabilities. Through its continued investments in R&D, between 2014 and 2018 Hexion has derived approximately 20% of its total revenues from new products.
  • Commitment to developing sustainable solutions. Hexion continues to further align its product portfolio with leading sustainability practices. The Company’s forest product resins allow natural, renewable resources to be used in building products instead of energy intensive steel and concrete, and the use of wood in building construction allows for the long-term sequestration of carbon. Specialty epoxy resins enable “green energy” by supplying composite materials for the wind energy market. Hexion’s waterborne coatings offer a low volatile organic compound (VOC) solution compared to solvent-borne coatings.

https://finance.yahoo.com/news/hexion-inc-completes-balance-sheet-205200866.html

July 2, 2019

Hexion DeLeverages

Hexion Inc. Completes Balance Sheet De-Leveraging

Business Wire

COLUMBUS, Ohio–(BUSINESS WIRE)–

Emerges from Chapter 11 in a Strong Financial Position to Support Long-Term Growth

Poised to Reinvest in Value-Driving Platform, Led By Differentiated Specialty Chemical Product Portfolio, World-Class R&D, Global Manufacturing Footprint and Sustainable Practices

Hexion Inc. (“Hexion” or the “Company”) today announced that it has successfully completed its balance sheet de-leveraging and emerged from Chapter 11. As a result of this process, Hexion has reduced its debt by more than $2.0 billion, received an infusion of $300 million in equity capital through a rights offering and raised approximately $2.0 billion in exit financing. With a strengthened capital structure and substantial free cash flow after debt service, Hexion is now well-positioned to make substantial reinvestments into its businesses to fuel strategic growth and drive value for its stakeholders.

Throughout the bankruptcy court-supervised process, Hexion’s global operations continued uninterrupted, providing customers with high-quality products and service. The de-leveraging plan has provided for payment in full to the Company’s trade creditors.

“We are moving forward with significantly less debt and greater financial flexibility, which enhances our competitive position and ability to create long-term value for our stakeholders,” said Craig A. Rogerson, President and CEO. “As an appropriately capitalized market leader with substantial free cash flow generation capabilities and a lower interest burden, we will continue to enhance our value-creating platform by accelerating new product development. Our growth strategy will be driven by investments in innovative products using our research and development capabilities and strategic partnerships, capitalizing on our global manufacturing footprint and commitment to sustainability. Going forward, we are well-positioned to take advantage of our operational momentum.”

Mr. Rogerson continued, “Our expedited emergence is a testament to the hard work and dedication of our associates, as well as the continued support of our customers and suppliers around the world. Our entire team is intensely focused on safely and efficiently delivering high-quality products and service for all of our customers.”

Compelling Value Drivers

  • Global specialty chemical company with leading market positions generating strong free cash flow. Hexion is the global leader in Forest Products and Epoxy, Phenolic and Coatings resins, maintaining #1 or #2 market positions representing approximately 80% of sales.
  • Industry-leading Research & Development (R&D) and technical service capabilities. Through its continued investments in R&D, between 2014 and 2018 Hexion has derived approximately 20% of its total revenues from new products.
  • Commitment to developing sustainable solutions. Hexion continues to further align its product portfolio with leading sustainability practices. The Company’s forest product resins allow natural, renewable resources to be used in building products instead of energy intensive steel and concrete, and the use of wood in building construction allows for the long-term sequestration of carbon. Specialty epoxy resins enable “green energy” by supplying composite materials for the wind energy market. Hexion’s waterborne coatings offer a low volatile organic compound (VOC) solution compared to solvent-borne coatings.

https://finance.yahoo.com/news/hexion-inc-completes-balance-sheet-205200866.html