US Hexion reports $76m Q3 loss on merger, costs

14 November 2008 21:10  [Source: ICIS news]

HOUSTON (ICIS news)--US resins producer Hexion Specialty Chemicals reported on Friday a third-quarter net loss of $76m (€60m) due to higher costs, hurricane disruptions and its pending merger with Huntsman.

Hexion reported a net loss of $2m for the same time last year.

During the quarter, Hexion took a $51m hit from costs associated with its pending $10.6bn merger with Huntsman. The deal has been mired in a tangle of lawsuits.

Hexion lost another $31m to higher costs in raw materials, freight and utilities. Hurricane disruptions knocked off an additional $12m.

The additional costs were partially offset by higher revenues. Third-quarter revenues were $1.61bn, up from $1.43bn for the same time last year, Hexion said.

By segment, epoxy and phenolic resins reported $62m in third-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA), down from $94m reported for the same time last year.

Formaldehyde and forest products resins reported third-quarter EBITDA of $46m, up from $40m for the same time last year.

Coatings and inks reported third-quarter EBITDA of $11m, down from $20m for the same time last year. Performance products reported third-quarter EBITDA of $23m, up from $22m for the same time last year.

"The weakening global economy clearly impacted some of our businesses," according to a statement by Craig Morrison, Hexion CEO. "We expect these conditions to last at least through 2009."

Nonetheless, the company's formaldehyde segment benefited from productivity initiatives, acquisitions and sales outside of North America, Morrison said. Demand remained steady for the company's oilfield products, electronics and specialty epoxies.

Hexion plans to save another $60m in productivity in the next 18 months, the company said.

In other news, the company's forest-products manufacturing site remains on track to begin production in Brazil in the first half of 2009, Morrison said. The same goes for Hexion's Russian forest-products joint venture with OAO Shchekinoazot.

($1 = €0.79)

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By: Al Greenwood
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