• Cost Reduction Program: Initiating a further $50 million cost reduction in the global polyurethanes business by year-end.
• Total Cost Reductions: $280 million in costs removed from the company over the past few years.
• Impact of Boeing Strike: Estimated cost of a few million dollars in the fourth quarter.

Release Date: November 05, 2024

• Warning! GuruFocus has detected 9 Warning Signs with HUN.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Huntsman Corp (NYSE:HUN) is seeing improvement in North American housing and construction, which is expected to positively impact earnings.
• Interest rates are decreasing, which could support economic growth and demand for Huntsman Corp (NYSE:HUN)'s products.
• The company is initiating a $50 million cost reduction program in its global polyurethanes business, adding to the $280 million in costs already reduced.
• Huntsman Corp (NYSE:HUN) is capitalizing on growing opportunities in the EV battery market and tightening insulation standards.
• The company expects gradual improvement in Asian and Middle Eastern markets in 2025, driven by stimulus announcements and lower inventories.

Negative Points

• Huntsman Corp (NYSE:HUN) is facing challenges with MDI price increases not gaining traction with customers.
• There is a record amount of global chemical assets on the market, particularly in Europe, which could lead to facility closures due to regulatory and high cost structures.
• The company is experiencing low demand growth, which is impacting capacity utilization rates and margin expansion.
• Huntsman Corp (NYSE:HUN) is dealing with the financial impact of the recently settled Boeing strike, estimated to cost a few million dollars in the fourth quarter.
• The European market is showing relatively low growth, with regulatory and energy policies hindering manufacturing prospects.

Q & A Highlights

Q: Do you expect MDI assets to be closed in Europe in this iteration of restructurings and reviews? A: I don't have specific insights into our competitors' plans, but given the cost structures in Europe, I would be surprised if all smaller, non-integrated facilities remain operational in the coming years.

Q: Can you detail the functions and regions where the $50 million cost reduction in polyurethanes will occur? A: Most of the cost reductions will be centered in Europe, particularly around our automotive and construction sectors. We will provide more details during our fourth-quarter call.

Q: Are there any more dividends expected from the SLIC China JV liquidation? A: We expect about RMB300 million left to liquidate from the JV in 2025, but it will not be recorded as a dividend for accounting purposes, so it won't impact free cash flow.

Q: What are your expectations for MDI prices by region in Q4, and how are raw material costs affecting this? A: MDI pricing is expected to remain flat, with some upward pressure in China. We will benefit partially from lower benzene costs, but this will be offset by flat pricing and potentially higher natural gas prices.

Q: What level of volume or sales do you need to see to start seeing appropriate leverage in the polyurethanes business? A: We typically start seeing leverage when capacity utilization reaches the high 80s. If demand continues to improve, particularly in North America, we could see margin expansion early in 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.