Huntsman (HUN 33.13, -0.20 -0.6%) trades off opening highs, modestly lower now after beating market expectations in its Q4 report this morning.
The manufacturer and marketer of specialty chemicals reported better than expected Q4 earnings of $0.76 on revenue growth of about 16% to about $2.2 billion led by 27% growth in the Polyurethanes business.
In that vein, the Polyurethanes business grew 27% to about $1.23 billion in Q4. The increase in revenues was mostly due to higher MDI average selling prices and MDI sales volumes. MDI average selling prices increased due to strong market conditions in all regions. The increase in MDI sales volumes was more than offset by a decrease in MTBE sales volumes resulting from the timing of MTBE shipments.
Elsewhere, Huntsman’s Performance Products business was flat on a reported basis to about $514 million, while on a pro forma basis saw revenues grow about 14%. Revenues were essentially flat as higher average selling prices and improved mix were offset by lower sales volumes. Average selling prices increased primarily in response to higher raw material costs and favorable product mix. The decrease in sales volumes was primarily due to the sale of the European surfactants business to Innospec Inc. in 2016, as well as planned and unplanned outages at our Port Neches site.
Modest growth was also seen in the Advanced Materials and Textile Effects businesses – 5% and 3%, respectively. The increase in revenues in Huntsman’s Advanced Materials segment was primarily due to higher average sales prices. Average selling prices increased primarily due to sales mix, as sales volumes in our higher value specialty business increased across all of our core markets. The increase in revenues in the Textile Effects segment was primarily due to volume growth, partially offset by lower average selling prices and unfavorable product mix. Sales volumes increased in the Americas, Europe and China. Average selling prices decreased primarily due to lower raw material costs.
In addition to a strong quarter, Huntsman announced some initiatives to increase return to shareholders. Firstly, management announced authorization to repurchase up to $400 million in shares of common stock in addition to the $50 million remaining under the company’s September 2015 share repurchase authorization. Huntsman also disclosed that, effective February 7, 2018, its Board of Directors approved an increase in its quarterly per share dividend from $0.125 to $0.1625.
Huntsman also provided an update regarding its recent secondary offering of Venator (NYSE – VNTR) shares. The net proceeds were used to pay down the remaining $511 million on Huntsman's Term Loan B due 2023, reducing net leverage to 1.4x. Huntsman's remaining ownership interest in Venator is currently about 53%. The company hopes to unload the remainder of the Venator stake by year end.