Second Quarter Performance Highlights
In the second quarter of 2019, the company achieved a net profit of US$118 million, compared with US$623 million in the same period last year; diluted earnings per share in the second quarter were US$0.47, compared with US$1.71 in the same period last year.
The adjusted net profit in the second quarter was US$146 million, compared with US$246 million in the same period last year; the adjusted diluted earnings per share in the second quarter was US$0.63, compared with US$1.01 in the same period last year.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in the second quarter was $318 million, compared to $415 million in the same period last year.
Net cash generated from operating activities was $304 million. Free cash flow for the quarter was $240 million.
Balance sheet remains strong with net leverage of 1.7x.
During the quarter the company repurchased approximately 4 million shares for approximately $81 million.
On July 26, 2019, Huntsman announced that it had reached a definitive agreement with Sasol to acquire the remainder of the Sasol-Huntsman maleic anhydride joint venture in Moers, Germany for US$92.5 million 50% stake. The purchase price is adjusted based on net debt and other agreed adjustments.
Huntsman Corporation announced its financial results for the second quarter of 2019 yesterday. In the quarter, the company achieved operating income of US$2.194 billion, net profit of US$118 million, adjusted net profit of US$146 million, and adjusted EBITDA of US$318 million.
Peter R. Huntsman, Chairman of the Board, President and Chief Executive Officer, commented:
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“We are satisfied with the stable profitability of our downstream core business portfolio. Despite the tough economic situation, we still generated a high free cash flow of US$240 million in the quarter. At the same time, we reiterated that we will achieve our original goal of achieving full-year The conversion ratio of adjusted EBITDA to free cash flow reached 40%. Facing the uncertain economic situation in the second half of the year, we will continue to strictly control costs, maintain profits, and strive to maintain a strong balance sheet and generate strong free cash We will continue to maintain a balanced capital allocation to ensure strategic organic and inorganic growth in our downstream portfolio while maintaining a competitive dividend and ongoing share repurchases.”
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Year-over-year change in segment performance
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Polyurethane sector
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In the second quarter, the company’s polyurethane segment revenue decreased year-over-year due to lower average selling prices of MDI and MTBE, partially offset by higher volumes of MDI and MTBE. The decrease in MDI average selling price was mainly due to lower component MDI selling prices in China and Europe. The decline in MTBE average selling price in China was mainly due to the decline in the price of high-octane gasoline. The increase in MDI sales was mainly due to the commissioning of a new MDI plant in China in 2018 and the acquisition of Demilec in the second quarter of the year. The decrease in Adjusted EBITDA was primarily due to lower MDI margins due to lower MDI prices in China and lower PO/MTBE margins, partially offset by higher volumes.
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High Performance Products Division
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In the second quarter, revenue in the Performance Products segment decreased year-over-year due to lower product average selling prices, partially offset by a slight increase in volume. The average selling price of the derivative products business decreased, mainly due to lower raw material costs; the average selling price of the upstream intermediate product business also decreased, mainly due to lower raw material costs and weak market demand. The increase in sales was primarily due to production interruptions during the second quarter of last year at the company’s Port Neches, Texas, plant for scheduled maintenance. The decrease in adjusted EBITDA of this segment was mainly due to the decrease in the average selling price of upstream intermediate products and certain amine products and lower product margins.
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New Materials Department
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In the second quarter, Advanced Materials segment revenue declined year-over-year due to lower volumes and lower average selling prices. The decline in sales in this segment was mainly due to lower sales in the powertrain and automotive-related markets. However, the positive effect of the company’s suitable product mix for the aerospace component market led to higher sales, which partially offset the aforementioned decline. The lower average selling price was primarily due to the strengthening of the U.S. dollar against major international currencies, partially offset by higher local selling prices. The segment’s Adjusted EBITDA declined due to higher fixed costs and a stronger U.S. dollar against major international currencies.
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Textile dyeing department
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In the second quarter, the revenue of the Textile Effects Division decreased year-on-year, mainly due to lower sales volume, which was partially offset by an increase in average selling price. The decline in sales volume was mainly due to lower demand due to market uncertainties in the US-China trade. Average selling prices increased due to higher raw material costs, partially offset by the impact of a stronger U.S. dollar against major international currencies. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes and higher raw material costs, partially offset by higher average selling prices.
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Group companies, LIFO and other affiliates
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In the second quarter, the adjusted EBITDA of the group company and other subsidiaries was a loss of US$37 million, a loss of US$39 million compared with the same period last year.million rose by $2 million.
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Liquidity, Capital Resources and Outstanding Debt
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In the second quarter, the company’s free cash flow was $240 million, compared to $174 million in the same period last year. Huntsman reaffirmed its target free cash flow conversion rate of about 40% for the full year. As of June 30, 2019, the company had $1.538 billion in cash and undrawn credit facilities.
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In the second quarter, capital expenditures were $66 million, compared to $54 million in the same period in 2018. Capital expenditures for 2019 are expected to be approximately $350 million to $360 million.
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In the second quarter, Huntsman paid approximately $81 million to repurchase approximately 4 million shares. At the end of the second quarter, approximately $608 million of shares remained outstanding under the existing $1 billion multi-year share repurchase program.
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income tax
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In the second quarter, corporate income tax expense was $50 million, compared to $4 million in the same period in 2018. The adjusted effective tax rate for the second quarter was 25%. The company expects the adjusted effective tax rate to be approximately 22%-24% in the future.
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