Huntsman (HUN) Q4 2010 earnings summary

Executive summary

• FY10 revenue rose 21% to $9.25B as selling prices and volumes increased across all segments; gross profit climbed 36% to $1.461B.

• Adjusted EBITDA increased to $872M from $529M, while net income attributable to Huntsman Corporation fell to $27M from $114M, reflecting major debt-extinguishment and comparison effects.

• Management cited recovering global demand and improving utilization, targeting $1.325B of Adjusted EBITDA within 2–3 years while prioritizing emerging-market growth and debt reduction.

Financial highlights

• FY10 operating income was $410M versus $13M in FY09; GAAP net income attributable to Huntsman Corporation was $27M versus $114M, and EPS was $0.11 versus $0.49.

• Adjusted net income was $200M versus an adjusted loss of $303M; adjusted diluted EPS was $0.83 versus an adjusted loss of $1.30.

• Gross profit rose to $1.461B from $1.078B; restructuring, impairment and plant-closing costs fell to $29M from $88M.

• Q4 revenue was $2.412B, gross profit $380M and net income attributable to Huntsman Corporation $30M; respective Q4 2009 figures were $2.064B, $354M and $99M.

• Operating cash flow was negative $58M versus positive $1.104B in FY09; net capital expenditures were $202M, and year-end cash was $966M.

Outlook and guidance

• Global demand was recovering, average selling prices rose annually and sequentially in major businesses, and seasonally adjusted utilization improved; early 2011 indicators supported optimism.

• Raw-material and energy costs were expected to remain elevated, while margins were expected to strengthen over the next few years.

• Targeted Adjusted EBITDA of $1.325B within 2–3 years, supported by growth in Asia and emerging markets and debt reduction.

• Expected 2011 pension and postretirement contributions were $159M; 2011 capital and compliance needs also include $8M–$10M in chemical-site security upgrades during 2011–12.