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September 14, 2023

Everchem’s Closers Only Club

Everchem’s exclusive Closers Only Club is reserved for only the highest caliber brass-baller salesmen in the chemical industry. Watch the hype video and be introduced to the top of the league: — read more

October 25, 2019

Huntsman Q3 Results

US Huntsman Q3 financials sharply down as low MDI pricing offsets higher volumes

Author: Jonathan Lopez

2019/10/25

LONDON (ICIS)–Huntsman’s higher sales volumes of methylene diphenyl diisocyanate (MDI) in the third quarter could not offset lower selling prices, with the polyurethanes (PU) division posting lower sales and earnings year on year, the US chemicals major said on Friday.

All other divisions – Performance Products, Advanced Materials, and Textile Effects – also posted lower sales and earnings during the quarter, year on year.

The negative set of results had already been announced by the company in July, when its CEO said full-year earnings could drop as much as 20%.

On Friday, however, Peter Huntsman said: “In spite of an increasingly challenging global economic environment, I have never been more pleased about our mix of businesses and the strength of our balance sheet.”

The company said lower MDI prices were recorded mostly in Europe and China, where the industrial slowdown has been the sharpest (see bottom graph).

As a result, its PU division under which MDI falls posted 12% lower sales ($993m) and sharply lower adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), at $146m.

In China, the company’s MDI volumes rose markedly after it started its new plant in the third quarter of 2018.

The Caojing plant has a production capacity of 240,000 tonnes/year; it is operated as a joint venture along with BASF, Shanghai Hua Yi (Group) Co, Shanghai Chlor-Akali Chemical Co and Sinopec Group Assets Management Corp.

The company said it was on course to close the divestment of its Chemical Intermediates and Surfactants businesses in early 2020, adding proceeds would stand at around $1.6bn.

At the time it announced the sale to Thailand’s major Indorama in August, Huntsman said proceeds would amount to more than $2.0bn.

At the Performance Products division, both sales volumes and selling prices fell on the back of weak markets and lower feedstocks costs passed on to customers.

Advanced Materials also posted lower sales volumes and lower selling prices, suffering from a higher exchange rate for the dollar, against other major currencies, weak markets and customer destocking, the company said.

Textile Effects, Huntsman smallest division, also suffered from weak markets and the US-China trade war, also posting lower volumes and selling prices.

Huntsman Q3 ($/m) Q3 2019 Q3 2018 Change
Sales 1,687 1,968 -14%
Adjusted EBITDA 215 308 -30%

–
MDI pricing US, Europe, China
Click on image to enlarge

–
MDI is consumed mainly in PU foams, which account for about 80% of global consumption.

Rigid foams, the largest outlet for MDI, are used mostly in construction, refrigeration, packaging and insulation.

MDI is also used to make binders, elastomers, adhesives, sealants, coatings and fibres.

Pictured: PU foam
Source: Simon Lees/Future/Shutterstock

Additional reporting by Fergus Jensen

https://www.icis.com/explore/resources/news/2019/10/25/10434838/us-huntsman-q3-financials-sharply-down-as-low-mdi-pricing-offsets-higher-volumes

October 25, 2019

Huntsman Q3 Results

US Huntsman Q3 financials sharply down as low MDI pricing offsets higher volumes

Author: Jonathan Lopez

2019/10/25

LONDON (ICIS)–Huntsman’s higher sales volumes of methylene diphenyl diisocyanate (MDI) in the third quarter could not offset lower selling prices, with the polyurethanes (PU) division posting lower sales and earnings year on year, the US chemicals major said on Friday.

All other divisions – Performance Products, Advanced Materials, and Textile Effects – also posted lower sales and earnings during the quarter, year on year.

The negative set of results had already been announced by the company in July, when its CEO said full-year earnings could drop as much as 20%.

On Friday, however, Peter Huntsman said: “In spite of an increasingly challenging global economic environment, I have never been more pleased about our mix of businesses and the strength of our balance sheet.”

The company said lower MDI prices were recorded mostly in Europe and China, where the industrial slowdown has been the sharpest (see bottom graph).

As a result, its PU division under which MDI falls posted 12% lower sales ($993m) and sharply lower adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), at $146m.

In China, the company’s MDI volumes rose markedly after it started its new plant in the third quarter of 2018.

The Caojing plant has a production capacity of 240,000 tonnes/year; it is operated as a joint venture along with BASF, Shanghai Hua Yi (Group) Co, Shanghai Chlor-Akali Chemical Co and Sinopec Group Assets Management Corp.

The company said it was on course to close the divestment of its Chemical Intermediates and Surfactants businesses in early 2020, adding proceeds would stand at around $1.6bn.

At the time it announced the sale to Thailand’s major Indorama in August, Huntsman said proceeds would amount to more than $2.0bn.

At the Performance Products division, both sales volumes and selling prices fell on the back of weak markets and lower feedstocks costs passed on to customers.

Advanced Materials also posted lower sales volumes and lower selling prices, suffering from a higher exchange rate for the dollar, against other major currencies, weak markets and customer destocking, the company said.

Textile Effects, Huntsman smallest division, also suffered from weak markets and the US-China trade war, also posting lower volumes and selling prices.

Huntsman Q3 ($/m) Q3 2019 Q3 2018 Change
Sales 1,687 1,968 -14%
Adjusted EBITDA 215 308 -30%

–
MDI pricing US, Europe, China
Click on image to enlarge

–
MDI is consumed mainly in PU foams, which account for about 80% of global consumption.

Rigid foams, the largest outlet for MDI, are used mostly in construction, refrigeration, packaging and insulation.

MDI is also used to make binders, elastomers, adhesives, sealants, coatings and fibres.

Pictured: PU foam
Source: Simon Lees/Future/Shutterstock

Additional reporting by Fergus Jensen

https://www.icis.com/explore/resources/news/2019/10/25/10434838/us-huntsman-q3-financials-sharply-down-as-low-mdi-pricing-offsets-higher-volumes

October 24, 2019

Urethane Comments from Dow Investors’ Call

Jim Fitterling

On Slide 5, Industrial Intermediates & Infrastructure operating EBIT declined versus the year ago period primarily due to margin compression in the polyurethanes component and MEG as well as lower demand in industrial end-markets.

In Industrial Solutions, volume declined modestly as a result of lower demand in energy, agriculture and automotive end-markets. This was partly offset by growth in catalyst application and demand in pharma end-markets. The business reported a significant drop in its equity earnings driven by margin compression for MEG at our Kuwait joint ventures.

Polyurethanes & Construction Chemicals sales declined on lower local pricing in all regions led by lower components prices. However, the business achieved volume growth driven by gains in the United States and Canada on improved MDI supply year-over-year as well as continued demand growth in polyurethane systems.

Our growth in systems reflects the businesses focus on driving its downstream agenda and moving the portfolio from merchant component sales to higher value formulated systems. It has been a multiyear journey and the progress we’ve made so far has been impressive. This quarter marked the 25th consecutive quarter of year-over-year volume growth for the systems business.

Vincent Andrews

Thank you and good morning everyone. Could you maybe talk a little bit about MDI and silicones and sort of what you think is going to happen through fourth quarter and into next year are we just going to bounce around these levels? Can MDI volume continue to compound at a mid-single digit rate or do we have to worry about that being a little bit lighter next year? Thank you.

Jim Fitterling

Thanks Vince. MDI and I would say siloxane versus silicones, MDI and siloxanes are bouncing around at pretty low levels, as you mentioned and I would expect them to stay in there. A little bit of term in the industrial side of the sector and in the auto side of the sector will put a pull there that would start to bring that back up, but haven’t seen that yet. With PMI really declining for the last four consecutive quarters, the big delta here is consumer has been really pulling all the volume growth and industrial hasn’t yet. But I do think with inventories being low, I don’t see any speculative activity out there and with downstream investments, like in our systems business downstream and our silicones business which are both continuing to hold up well that’s going to create a pull on that supply demand balance. And with nothing new on the horizon, I think, you’re going to see some steady improvement. We get a deal on trade if we get a phase one trade deal that obviously will be a tailwind. And I think the industry is poised right now for a little tailwind.

Hassan Ahmed

Good morning Jim. Jim, a bit of an interesting sort of quarter. Obviously, we had this incident happen out in Saudi Arabia, which I would imagine limited feedstock supply to a variety of producers out there. And I would imagine Sadara as well. So could you comment on whether or not you guys saw any curtailments in feedstock supply? Has that normalized out in Sadara? And was there any Q3 negative impact from that? And any residual impact we should expect in Q4?

Howard Ungerleider

Thanks Hassan great question. We saw limited a reduction in feedstock supply. We were down about 20% for less than two weeks. So that wasn’t the real drag on Sadara in the third quarter. The bigger drag was we had a industrial gas supplier that supplies into the complex that really had an outage that really costs us on the range of $25 million, $30 million on Sadara EBITDA. And I think that’s the bigger impact.

Sadara is running well right now. I don’t see any long-term issue from that. And really good cooperation and response from Aramco, real solid response.

https://seekingalpha.com/article/4298675-dows-dow-ceo-jim-fitterling-q3-2019-results-earnings-call-transcript?part=single

October 24, 2019

Urethane Comments from Dow Investors’ Call

Jim Fitterling

On Slide 5, Industrial Intermediates & Infrastructure operating EBIT declined versus the year ago period primarily due to margin compression in the polyurethanes component and MEG as well as lower demand in industrial end-markets.

In Industrial Solutions, volume declined modestly as a result of lower demand in energy, agriculture and automotive end-markets. This was partly offset by growth in catalyst application and demand in pharma end-markets. The business reported a significant drop in its equity earnings driven by margin compression for MEG at our Kuwait joint ventures.

Polyurethanes & Construction Chemicals sales declined on lower local pricing in all regions led by lower components prices. However, the business achieved volume growth driven by gains in the United States and Canada on improved MDI supply year-over-year as well as continued demand growth in polyurethane systems.

Our growth in systems reflects the businesses focus on driving its downstream agenda and moving the portfolio from merchant component sales to higher value formulated systems. It has been a multiyear journey and the progress we’ve made so far has been impressive. This quarter marked the 25th consecutive quarter of year-over-year volume growth for the systems business.

Vincent Andrews

Thank you and good morning everyone. Could you maybe talk a little bit about MDI and silicones and sort of what you think is going to happen through fourth quarter and into next year are we just going to bounce around these levels? Can MDI volume continue to compound at a mid-single digit rate or do we have to worry about that being a little bit lighter next year? Thank you.

Jim Fitterling

Thanks Vince. MDI and I would say siloxane versus silicones, MDI and siloxanes are bouncing around at pretty low levels, as you mentioned and I would expect them to stay in there. A little bit of term in the industrial side of the sector and in the auto side of the sector will put a pull there that would start to bring that back up, but haven’t seen that yet. With PMI really declining for the last four consecutive quarters, the big delta here is consumer has been really pulling all the volume growth and industrial hasn’t yet. But I do think with inventories being low, I don’t see any speculative activity out there and with downstream investments, like in our systems business downstream and our silicones business which are both continuing to hold up well that’s going to create a pull on that supply demand balance. And with nothing new on the horizon, I think, you’re going to see some steady improvement. We get a deal on trade if we get a phase one trade deal that obviously will be a tailwind. And I think the industry is poised right now for a little tailwind.

Hassan Ahmed

Good morning Jim. Jim, a bit of an interesting sort of quarter. Obviously, we had this incident happen out in Saudi Arabia, which I would imagine limited feedstock supply to a variety of producers out there. And I would imagine Sadara as well. So could you comment on whether or not you guys saw any curtailments in feedstock supply? Has that normalized out in Sadara? And was there any Q3 negative impact from that? And any residual impact we should expect in Q4?

Howard Ungerleider

Thanks Hassan great question. We saw limited a reduction in feedstock supply. We were down about 20% for less than two weeks. So that wasn’t the real drag on Sadara in the third quarter. The bigger drag was we had a industrial gas supplier that supplies into the complex that really had an outage that really costs us on the range of $25 million, $30 million on Sadara EBITDA. And I think that’s the bigger impact.

Sadara is running well right now. I don’t see any long-term issue from that. And really good cooperation and response from Aramco, real solid response.

https://seekingalpha.com/article/4298675-dows-dow-ceo-jim-fitterling-q3-2019-results-earnings-call-transcript?part=single

October 24, 2019

BASF Q3 Results

BASF Group third-quarter EBIT before special items declines 24% from prior-year quarter; outlook for 2019 confirmed

  • Sales of €15.2 billion (minus 2%); sales volumes match level in prior-year quarter
  • EBIT before special items declines to €1.1 billion, primarily due to significantly lower earnings contributions from Chemicals and Materials
  • Surface Technologies, Agricultural Solutions, Industrial Solutions and Nutrition & Care segments post considerable increase in earnings
  • Outlook for 2019 confirmed: EBIT before special items expected to be up to 30% below prior-year level

BASF Group sales in the third quarter of 2019 declined slightly year on year and amounted to €15.2 billion. This was mainly attributable to lower prices in the Materials and Chemicals segments. The uncertainties in the market and cautious ordering by customers also played a role. Demand from key customer sectors did not recover. Nevertheless, BASF was able to keep its sales volumes at the level of the prior-year quarter thanks mainly to higher volumes in the Agricultural Solutions and Surface Technologies segments.

Income from operations (EBIT) before special items was €1.1 billion, down by 24% compared with the level of the third quarter of 2018. This was primarily due to significantly lower contributions from the Materials and Chemicals segments. As expected, isocyanate prices declined considerably. In addition, there were scheduled turnarounds at the steam crackers and falling margins for cracker products. These factors had a significant negative impact on earnings in the two segments. “In our downstream divisions, we were successful despite the difficult market environment and posted a considerable improvement compared with the prior-year quarter,” said Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE, at the presentation of the financial results for the third quarter of 2019. In the Industrial Solutions segment, EBIT before special items increased considerably primarily due to lower fixed costs. In the Surface Technologies segment, EBIT before special items also rose considerably in all three divisions. In the Nutrition & Care segment, EBIT before special items grew considerably as a result of significantly higher earnings in the Care Chemicals division. In the Agricultural Solutions segment, EBIT before special items increased considerably, driven mainly by higher sales. One reason for this was the good start to the season in South America.

EBITDA increased to €2.3 billion, compared with €2.2 billion in the third quarter of 2018. EBITDA before special items was down by 8% to €2.1 billion.

EBIT amounted to €1.4 billion, nearly matching the prior-year level. Special items in EBIT totaled €257 million, compared with minus €75 million in the prior-year period. A considerable disposal gain from the sale of BASF’s share of the Klybeck site in Basel, Switzerland, more than offset special charges for restructuring measures, for the integration of the businesses acquired from Bayer and for divestitures.

Net income amounted to €911 million, compared with €1.2 billion in the third quarter of 2018.

Earnings per share in the third quarter of 2019 fell to €1.00 from €1.31 in the prior-year quarter. Adjusted earnings per share were €0.86, compared to €1.51 in the prior-year quarter.

Cash flows from operating activities amounted to €2.0 billion, compared with €2.9 billion in the third quarter of 2018. Free cash flow declined to €1.1 billion as a result of lower cash flows from operating activities.

BASF proceeding rapidly and systematically with strategy implementation

The geopolitical conditions are and will remain challenging for BASF. “In particular, the trade conflict between the United States and China is weighing on our business. Moreover, there are uncertainties related to Brexit,” said Brudermüller. He added: “These events are acting as a drag on the economy – not only in export-oriented countries in Europe. The United States is also experiencing a noticeable slowdown. Growth continues in China, albeit at a slower pace. Production in the global automotive industry again declined compared with the already low level at the end of the first half of the year.”

“It is not within our power to change the unfavorable underlying conditions,” said Brudermüller. “However, we know exactly what we have to address within BASF. And we are working on this with speed and determination. We are rapidly and systematically reshaping our organization – toward greater customer focus and leaner structures.”

2019 is a transition year for BASF. Brudermüller: “We are using the time this year to implement our corporate strategy with energy, passion and speed – step by step. We are streamlining our administration, focusing the roles of services and regions, and simplifying procedures and processes. We have already made good progress in reshaping our organization.”

The implementation of the strategy BASF presented about a year ago is proceeding rapidly. Significant parts of the functional services have been embedded in the operating divisions. As of October 1, BASF completed the organizational reassignment of around 20,000 employees.

Acceleration of excellence program

“We have accelerated our excellence program and are well on our way to reaching the targeted annual EBITDA contribution of €2 billion by the end of 2021,” said Dr. Hans-Ulrich Engel, Chief Financial Officer and Vice Chairman of the Board of Executive Directors of BASF SE. “In the current year, we will achieve the first positive EBITDA contributions amounting to around €500 million,” he added. However, BASF expects the accelerated implementation to result in one-off costs of a similar magnitude. For 2020, the company expects an EBITDA contribution in the range of €1 billion to €1.3 billion. This will be offset by one-off costs estimated at €200 million to €300 million.

The largest contribution from the measures carried out under this program will be achieved in the areas of production, logistics and planning. “Moreover, we are streamlining our organization and creating leaner structures. Around 1,800 positions were reduced globally by the end of September 2019,” Engel said.

BASF Group outlook for 2019

Martin Brudermüller confirmed the 2019 outlook for the BASF Group. Accordingly, BASF still expects a slight decline in sales. For EBIT before special items, BASF expects a considerable decline of up to 30%. Return on capital employed (ROCE) for the full year 2019 is expected to decline considerably compared with 2018.

The company slightly adjusted its underlying planning assumptions for the oil price: For 2019, BASF now expects an average Brent blend oil price for the year of $65 per barrel (previously $70).

The other assumptions for the global economic environment remain unchanged (growth in gross domestic product: 2.5%; growth in industrial production: 1.5%; growth in chemical production: 1.5%; average euro/dollar exchange rate of $1.15 per euro).

https://www.basf.com/global/en/media/news-releases/2019/10/p-19-367.html