UPDATE 3-Huntsman posts Q4 profit, sells base chemicals units
Thu Feb 15, 2007 1:11pm ET
NEW YORK, Feb 15 (Reuters) - Huntsman Corp. on Thursday posted a fourth-quarter profit versus a year-ago loss and said it would sell its commodity chemicals business to Flint Hills Resources for about $761 million.
The Woodlands, Texas-based Huntsman posted a quarterly profit of $80.2 million, or 34 cents a share, compared with a year-ago loss of $65 million, or 29 cents a share.
The company's year-ago net income was hurt by costs related to restructuring, impairment and plant closures.
Analysts surveyed by Reuters Estimates had forecast quarterly earnings of 33 cents a share.
In a research note, Laurence Alexander, an analyst with Jefferies and Co., said Huntsman's sale of its U.S. commodity assets should offset mixed fourth quarter results that reflect disappointing segment margins but which were boosted by an income tax benefit.
Revenue for the period dipped to $2.54 billion from $2.56 billion a year ago.
On a sequential basis, the company expects higher first quarter earnings, from each of its three differentiated segments that will remain following the sale.
Huntsman on Wednesday initiated a quarterly cash dividend of 10 cents a share.
COMMODITY BUSINESS SALE
Huntsman also said it has signed a definitive agreement to sell its U.S. base chemicals and polymers business to Flint Hills Resources, LLC, a wholly owned subsidiary of Koch Industries, Inc.
The deal calls for Flint Hills to buy Huntsman's olefins and polymers manufacturing assets at five sites in Texas, Illinois and Michigan.
Flint Hills Resources will acquire the operations for $456 million in cash plus the value of inventory on the date of closing.
Huntsman said the value of the inventory was $286 million, as of Dec. 31, 2006. The company will also liquidate other elements of working capital, valued at about $19 million, soon after closing the deal in the third quarter.
With the sale, Huntsman said it would have completed its planned divestment of its commodity petrochemical businesses as part of its shift toward being a differentiated chemical company.
Huntsman last year sold its European commodities business to Saudi Basic Industries Corp. <2010.SE> (SABIC) and certain U.S. MTBE and butadiene assets to Texas Petrochemicals.
Hassan Ahmed, an analyst with HSBC, noted that the sale price was a bit disappointing, but added that the dividend announcement and the fact that the sale is complete would be viewed as a positive.
Ahmed added that the sale is dilutive to earnings per share and that investors were already overpaying for what is left of the company's portfolio.
Shares of the company were down 3.7 percent to $20.28 in afternoon trading on the New York Stock Exchange.
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