11 May 2009 23:30 [Source: ICIS news]
HOUSTON (ICIS news)--Hexion Specialty Chemicals reported a first-quarter net income of $116m (€84.7m) due to debt repayments, but its operating income slipped 85.5% from year-ago levels due to lower sales, the US epoxy-resin producer said on Monday.
Operating income fell to $12m from $83m in the 2008 first quarter. Despite reduced sales, the company was still able to post a profit behind a $21m decrease in fixed costs and the reduction of $30m in expenses associated with the failed merger with Huntsman.
The loss was in line with the company’s previous projection of an 82-94% drop.
“Our first quarter 2009 sales reflected the pass through of lower raw material costs to our customers, weak demand across many of our markets and the negative impact of customers continuing to carefully manage their inventory levels,” said CEO Craig Morrison.
First-quarter sales fell by 44.3%, to $914m from $1.64bn in the prior-year period.
Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) generally slipped as the company’s epoxy and phenolic resins, formaldehyde and forest products resins and coatings and inks segments all fell substantially due to the global economic downturn, the company said.
Hexion’s performance products segment was the outlier, which rose to an EBITDA of $25m from $22m in the year-ago period. Hexion attributed the increase to positive pricing and a favourable product mix within the company’s oilfield products.
The company said it expected its second-quarter sales and EBITDA to remain well below prior-year results and generally in line with first quarter results, adjusting for seasonality.
“We continue to believe that market conditions will remain challenging in 2009,” Morrison said.
($1 = €0.73)
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