Momentive Specialty’s Q3 profits hit by economic uncertainty

18 October 2011 17:43  [Source: ICIS news]

HOUSTON (ICIS)--Momentive Specialty Chemicals expects to report a sharp decline in its 2011 third-quarter operating and segment profits, as economic uncertainty has prompted customers to be cautious, the US-based producer said in a preliminary results report on Tuesday.

Momentive said sales for the three months ended 30 September are expected to come in at around $1.2bn (€876m). It recorded the same revenue figure for the third quarter last year after adjusting for a divestiture.

However, 2011 third-quarter operating income is expected down to around $93m–$104m, compared with the $188m Momentive achieved in the 2010 third quarter.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the three months ended 30 September 2011 from Momentive’s business segments – epoxy, phenolic and coating resins, and forest products resins – are expected at $156m–$166m. This compares with EBITDA of $193m in the equivalent quarter of 2010, Momentive said.

In the 2011 second quarter, Momentive reported sales of $1.44bn and segment EBITDA of $189m.

“Due to the recent economic uncertainty, we have seen some caution among our customers negatively impacting our third-quarter 2011 results,” said CEO Craig Morrison.

“We believe the quarter was impacted by both a softening economy as well as a drawdown of inventories across a number of key segments,” Morrison said.

Some product lines – such as Momentive’s oilfield proppants and its North American formaldehyde businesses – continued to perform well, compared with the 2010 third quarter, he said.

However, those positives were offset by “headwinds” in Momentive’s specialty epoxy business coming from tightness in Chinese credit markets and the reduction of Chinese government subsidies, Morrison said.

In response to the economic volatility, Momentive Specialty is reviewing plans to “aggressively accelerate” savings from its shared services agreement with sister company Momentive Performance Materials, the CEO said.

In addition, Momentive will launch cost reviews “across all aspects” of its business, Morrison said.

Momentive expects to file its 2011 third-quarter results in early November.

($1 = €0.73)

For more on Momentive and other producers visit ICIS company intelligence

By: Stefan Baumgarten
+1 713 525 2653

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