08 March 2012 23:36 [Source: ICIS news]
HOUSTON (ICIS)--The chief executive of Huntsman said on Thursday he does not expect to see as much profit-margin growth from titanium dioxide (TiO2) this year as last because of rising raw materials costs and resistance to price hikes.
CEO Peter Huntsman said he was still “bullish” on TiO2 but added that the market was likely to cool off after last year’s rapid run-up in prices.
”I am just trying to be realistic,” he said during the company’s annual investor day event in New York.
Huntsman’s pigments business, which includes TiO2, reported that adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for 2011 rose by 136% to $508m (€386m) from 2010.
Pigments revenues rose by 35% to $1.6bn, but sales volumes fell by 2%.
“The growth in earnings this year will not come from continuing improvement in TiO2 but from the rest of our division as a result of controlling costs,” Peter Huntsman said.
He added that the company has seen first-quarter improvements in all of its businesses except TiO2.
Downstream TiO2 buyers were showing more resistance to price proposals, he said, but demand could return by April.
North American TiO2 buyers have acknowledged continuing cost pressure from ilmenite ore, which is used in the production of the pigment, but contend that ample supply weakens arguments for price gains in April.
Producers were mum on supply levels, but some conceded the likelihood of diminished year-over-year earnings because of rising ore costs and said demand is lagging the levels of a year ago, when tight supply heightened buying interest and prices.
Peter Huntsman said he expects to see TiO2 earnings reach a “healthy plateau” during the next two to three years.
Company founder and board chairman Jon Huntsman Sr said the company has been undervalued as a result of past TiO2 market conditions.
“We are not a TiO2 company” he said. “It is one of our five products.”
The company’s other businesses include polyurethanes, performance products, advanced materials and textile effects.
Huntsman is still interested in a sale of all or parts of the company, provided the price is right, Jon Huntsman Sr said. However, the company has no interest in pursuing such a sale at its current valuation, he added.
Additional reporting by Larry Terry
($1 = €0.76)
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