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Huntsman's (HUN) Q1 Earnings Beat Estimates, Revenues Miss

Huntsman Corporation HUN logged a first-quarter 2024 net loss of $37 million or 22 cents per share. This compares to a profit of $153 million or 83 cents in the year-ago quarter.

Barring one-time items, adjusted loss per share came in at 6 cents p for the reported quarter. It was narrower than the Zacks Consensus Estimate of a loss of 8 cents.

Revenues were $1,470 million, down around 8% year over year. The top line missed the Zacks Consensus Estimate of $1,476.5 million. HUN witnessed lower sales across its segments in the quarter on reduced prices.

Huntsman Corporation Price, Consensus and EPS Surprise

 

Huntsman Corporation Price, Consensus and EPS Surprise
Huntsman Corporation Price, Consensus and EPS Surprise

Huntsman Corporation price-consensus-eps-surprise-chart | Huntsman Corporation Quote

 

Segment Highlights

Polyurethanes: Revenues from this segment dropped 7% year over year, reaching $926 million in the latest quarter. This decline is attributed to lower average selling prices for MDI and an unfavorable product mix, though increased sales volumes partially offset it. Despite the decrease, this result surpassed our estimate of $862.2 million. A less favorable supply-demand environment influenced the drop in MDI prices. At the same time, the boost in sales volume was driven by moderately increased demand and market share gains in specific regions, mainly in the Americas and Europe.

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Performance Products: Revenues declined 13% to $291 million, driven by a reduction in average selling prices and an unfavorable product mix, though somewhat counterbalanced by higher sales volumes. The figure was below our estimate of $328.2 million. The downside in average selling prices was largely due to competitive pressures, especially in Europe. Sales volume rose, bolstered by improved industrial and construction activity, along with increased demand in the coatings, adhesives and lubricants markets.

Advanced Materials: Revenues from the unit fell 10% to $261 million, primarily because of reduced sales volumes and lower average selling prices. This figure was below our estimate of $328.7 million. Lower raw materials costs primarily caused the decline in average selling prices. Sales volumes decreased as a result of slower activity in general industry and commodity markets, partially mitigated by growth in aerospace and electrical infrastructure markets due to increased customer demand.

Financials

Huntsman ended the quarter with cash of $552 million, down 10% year over year. Long-term debt was $1,660 million, up 10% year over year.

In first-quarter 2024, net cash used in operating activities from continuing operations was $63 million. Free cash flow from continuing operations was a use of cash of $105 million.

Outlook

In the first quarter of 2024, Huntsman showed sequential improvement from fourth-quarter levels, largely owing to higher sales volume and better margins. It expects these trends to continue into a seasonally-stronger second quarter. While overall demand for its products and margins in the Polyurethanes segment are still below historical averages, the company remains optimistic that both will improve as key markets recover in the coming quarters. Huntsman is concentrating on controlling costs to boost returns and cash flow, which will provide the flexibility to invest in long-term growth and return cash to shareholders.

Price Performance

Huntsman’s shares have lost 4.9% in the past year compared with a 3.6% decline of the industry.

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Zacks Rank & Key Picks

HUN currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Basic Materials space are Gold Fields Limited GFI, sporting a Zacks Rank #1 (Strong Buy), and Valvoline Inc. VVV and American Vanguard Corporation AVD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for GFI’s first-quarter earnings is pegged at 22 cents per share. The Zacks Consensus Estimate for GFI’s first-quarter earnings has been stable in the past 60 days.

Valvoline is slated to report fiscal second-quarter results on May 8. The consensus estimate for VVV’s second-quarter earnings is pegged at 36 cents per share. The company’s shares have rallied around 27% in the past year.

AVD is expected to report first-quarter results on May 14. The consensus estimate for AVD’s first-quarter earnings is pegged at 8 cents per share, indicating a year-over-year rise of 14.3%.

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