Lower sales volumes and prices slashed profits for The Woodlands-based chemical maker Huntsman Corp. in the first quarter.
The petrochemical manufacturer net income attributable to its company dove to $119 million from $274 million in the same quarter last year – a 56 percent drop. Its revenue slid to $2 billion from $2.3 billion in the same quarter last year.
Prices for the chemical methylene diphenyl diisocyanate (MDI) – which is used primarily in the production of rigid polyurethane foams used for insulation for homes and refrigerators — fell sharply particularly in Europe and China. Those lower prices didn’t offset increased MDI production due to the startup of a new MDI plant in China and the acquisition of the North American spray polyurethane foam manufacturer Demilec in the second quarter of 2018.
Prices for the chemical compound MTBE, used as a blending component in gasoline outside of the U.S., also dropped on the back of lower prices for high octane gasoline, the company said.
Huntsman also suffered from lower prices and sales revenue due to weak market conditions in its performance products division, which produces specialist chemicals used in agriculture, cleaning, adhesives, sealants, plastics, refineries, oilfields and thousands of other uses. The company’s textile chemicals sectors and advance materials sector suffered similar fate with weak pricing.
“While global economic conditions remained challenging in the first quarter of this year, we are pleased with the relative resilience of our core downstream portfolio. The month of March ended slightly better than we projected, and while we remain cautious of certain regions of the world, notably Europe, we see momentum returning to Asia, especially in China,” Peter R. Huntsman, Chairman, President and CEO, in a statement.
Despite the lackluster first quarter results, Huntsman’s CEO said the company is on track to achieve its second best year ever and remains “focused on delivering consistent strong free cash flow and executing our downstream strategy through strategic investments, new products and continued globalization of recent bolt-on acquisitions. ”
Chris Muir, an analyst with the investment firm CFRA Research, in a note to clients said he was reducing his outlook for how much the company would make in 2019.
“We see some signs of momentum returning to Asian markets, but slower growth in HUN’s European markets. However, we continue to see lower pricing in 2019 pressuring results.”Muir wrote.