Huntsman Corporation Q2 2010 Earnings Call Transcript

In the second quarter sales revenue for our MDI urethanes business increased 34% compared to the prior year and 9% compared to the prior quarter. The favorable increase in revenue was primarily due to a combination of strong demand in MDI growth and higher selling prices implemented to offset higher raw material costs.

In Europe, our largest market, we saw double digit growth in both a year-over-year and sequential basis largely as a result of strong demand for installation even with an overall soft construction market.

We saw strong sales volume growth in the Americas despite a slow housing market. MDI substitution for other less efficient products is most evident in these more developed economies. Overall demand in Asia slowed somewhat in the second quarter compared to the first but increased compared to the prior year as customers reduced inventories and some Chinese government stimulus initiatives ended.

Price initiatives were announced in all regions and are progressing but overall margins were squeezed with the increase of raw material cost. Strong demand for MTBE outside the United States has attracted additional production capacity in the U.S. to supply the market. The second quarter MTBE Gulf Coast sea factor, which is a published industry benchmark used to set contract selling prices was half of what it was in the prior year. As a result, although our Port Neches, Texas facility is operating at full capacity following a turnaround in inspection in the first quarter, our PO/MTBE earnings were well below normalized level.

Let’s turn to slide four and focus on our Performance Products division. Earnings within this division improved tremendously to a $116 million. Although $15 million of this was the result of a non-recurring credit related to our Sasol-Huntsman Maleic Anhydride joint venture in Moers, Germany. I am very pleased with the underlying performance of this business.

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