Huntsman (HUN) Q4 2008 earnings summary

Executive summary

• FY08 revenue rose 6% YoY to $10.215B, while operating income fell to $165M from $537M and gross profit declined 18% to $1.264B amid recession-driven volume and margin pressure.

• Net income attributable to Huntsman Corporation was $609M versus a $172M loss in 2007, primarily reflecting $780M of merger-related income and other non-recurring items.

• The failed merger settlement strengthened liquidity and reduced debt; management entered 2009 expecting continued near-term economic weakness but signs of recovery in some regions.

Financial highlights

• Revenue increased 6% to $10.215B; higher average selling prices across segments more than offset lower sales volumes.

• Gross profit fell 18% to $1.264B; operating income dropped 69% to $165M, reflecting lower segment gross profit and higher operating expenses.

• Net income attributable to Huntsman Corporation was $609M, or diluted EPS of $2.60, versus a $172M loss, or diluted loss per share of $0.74, in 2007.

• Operating cash flow was $767M, including $765M of net settlement proceeds; capex was $418M, down from $665M in 2007.

Outlook and guidance

• Cost-reduction actions launched in 2008 and 2009 were expected to generate annual savings above $150M, including workforce reductions of about 10%.

• 2009 plans called for approximately $230M of capex and $125M of restructuring spending, funded through cash, operations and financing arrangements.

• Management expected difficult chemical-market conditions to persist in the short term, while citing improving signs in Asia and early signs of improvement in Europe and North America.

• Grimsby TiO2 plant closure was expected to cease production in Q1 2009, with annual operating cost savings of approximately $28M.