Huntsman profit beats Street; stock jumps

Huntsman profit beats Street; stock jumps

12:31 PM, 18th June 2011
Huntsman profit beats Street; stock jumps
Peter R. Huntsman, CEO, Huntsman.

NEW YORK, US: Huntsman Corporation posted a better-than-expected quarterly profit as it raised prices to offset increased raw material costs, sending its shares up 6.2 per cent to a nearly three-year high.

The company, which makes the building blocks for auto paint, foam insulation and Spandex, said demand was strong, despite higher prices in four of its five business units.

Margins improved in only three units, though. The pigments unit saw margins jump the most, 13 percentage points, due to tight supplies of titanium dioxide, a key ingredient in auto paint.

“They did extremely well. Their facilities are running at full capacity. They’re able to raise prices to offset costs and demand is extremely strong,” said Edlain Rodriguez, Analyst, Gleacher & Co.

In a February interview with Reuters, CEO, Peter Huntsman warned that supply costs would jump in the first quarter. “Demand for our largest businesses continues to improve with the global economic recovery. We are raising prices and recapturing margin despite the headwind of increased raw material and energy costs,” Huntsman said in a statement on Thursday.

For the first quarter, the company posted net income of $ 62 million or 26 cents per share, compared with a net loss of $ 172 million or 73 cents per share, in the year-ago period.

Excluding a charge to settle a legal dispute, a gain from currency transactions and other one-time items, Huntsman earned 47 cents per share. By that measure, analysts expected 24 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 28 per cent to $ 2.68 billion. Analysts expected $ 2.38 billion.

The company’s cost of goods sold, a key measure of raw material prices, jumped 28 per cent to $2.22 billion.

Sales dropped in the company’s textile effects unit, which makes clothing dyes. Customers were not as willing to pay higher prices that stemmed in part from spiking cotton costs.

Huntsman is one of the world’s largest producers of titanium dioxide, which is primarily used to make automobile paint. Last month, rival DuPont said a Chinese company stole its titanium dioxide trade secrets.

Huntsman shares were up 6.2 per cent at $ 20.69 in afternoon trading after hitting a nearly three-year high of $ 20.95 earlier in the session. Jon Huntsman, the former US ambassador to China and brother of Huntsman Corp’s chief executive, is considering a run for the White House.

© Reuters News

 

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