Huntsman profit beats on demand for polyurethane foam
(Reuters) - Chemical maker Huntsman Corp (HUN.N) reported a higher-than-expected quarterly profit on Wednesday, driven by strong demand for polyurethanes used in foam insulation.
The company's stock was up 2.8 percent at $13.00 in morning trading after jumping as much as 6.6 percent after the opening bell.
Second-quarter net income rose to $124 million, or 52 cents per share, from $114 million, or 47 cents per share, a year earlier.
Excluding restructuring charges and other one-time items, Huntsman earned 58 cents per share. By that measure, analysts on average expected 54 cents, according to Thomson Reuters I/B/E/S.
Revenue dipped 0.7 percent to $2.91 billion. Analysts expected $3.02 billion.
Earnings and revenue in the company's polyurethane unit jumped sharply, helped by sales of foam for cushions to automakers like BMW (BMWG.DE).
In the pigments unit, volume fell, primarily because of weak demand for Huntsman's titanium dioxide, or Ti02.
Customers, especially in Asia, held off on purchases of the paint pigment. Higher selling prices helped offset the drop in volume, Huntsman said.
DuPont (DD.N) is the world's largest producer of the critical pigment, which is used to give paint and other coatings a white hue. Last week it also said demand for Ti02 had fallen.
Despite the drop, DuPont said demand for Ti02 would not be as soft as some fear, an outlook that Wall Street met with skepticism.
Huntsman warned that profit from its Ti02 business would be lower in 2012 than in 2011.
"We have heard of increased use of lower-quality Chinese materials," Chief Executive Officer Peter Huntsman said on a conference call with investors.
On Wednesday, Wells Fargo chemical industry analyst Frank Mitsch praised Huntsman for its frank comments on Ti02 demand and said the company had "established itself as the most-realistic voice on the industry and foresees margin pressure and volume weakness ahead."
Huntsman said the company had yet to see all the benefits from its ongoing restructuring program, although he warned that plant outages would increase.
"We expect our earnings in the third quarter to be sequentially lower than the second," Huntsman said.
(Reporting by Ernest Scheyder in New York and Swetha Gopinath in Bangalore; Editing by Saumyadeb Chakrabarty and Lisa Von Ahn)