* Q3 adj EPS 34 vs Street forecast 21 cents
* Revenue up 15.7 percent
* Shares up nearly 2 percent in midday trading (Adds CEO and CFO comments; updates stock)
By Ernest Scheyder
NEW YORK, Nov 4 (Reuters) - Surging paint demand boosted profits at chemicals maker Huntsman Corp (HUN.N), partly due to an improving global auto market, sending its shares up nearly 2 percent.
Huntsman makes titanium dioxide (Ti02), a key ingredient in car paint, and most of that product goes to customers in Europe and Asia. Volumes, or the physical amount of product sold, and pricing both rose during the third quarter, with demand especially strong in Asia and Europe, the company said.
“There’s no doubt that demand is recovering as inventories are low,” Chief Executive Peter Huntsman told Reuters. “Margins should improve, and be able to offset rising raw material costs.”
Earlier this week Dow Chemical (DOW.N) said it was working on technology that will let paint producers use less titanium dioxide. Huntsman said he was not worried by this. [ID:nN01176333]
“Ti02 has been a very difficult product to replace,” he said. “It still is a very competitive material that goes into the ingredients of a can of paint.”
Huntsman Corp is selling all the Ti02 it can produce, the CEO said. He estimates global demand will reach 5 million tons this year, with capacity of about 5.3 million tons.
For the third quarter, Huntsman Corp reported net income of $55 million, or 23 cents per share, compared with a net loss of $68 million, or 29 cents per share, in the year-ago period.
Excluding one-time items, the company posted a profit of 34 cents per share. On that basis, analysts expected 21 cents per share, according to Thomson Reuters I/B/E/S.
Operating profit rose in all units, including the textile effects business. Improving results at the textile unit, which sells products for use in no-iron clothes, offer a positive read on the U.S. consumer’s spending habits.
Quarterly revenue rose 15.7 percent to $2.4 billion. Analysts expected $2.29 billion.
Huntsman Corp, based in The Woodlands, Texas, said its cash reserves at the end of the quarter were down 42.2 percent from a year earlier to $1.01 billion, due in part to an increase in working capital and debt repayment.
“We have more liquidity than we need,” Chief Financial Officer Emo Esplin told Reuters, adding that investors can expect the company to use excess cash to reduce debt.
Shares of Huntsman rose 27 cents to $14.18 in midday trading. The stock has traded between $7.73 and $14.25 in the past 52 weeks. (Reporting by Ernest Scheyder; Editing by Derek Caney and Matthew Lewis and John Wallace)