Rocks and Boulders

The base chemical products generated at Huntsman’s Port Author facility generate less than 10% of the company’s Ebitda. This seems to be the reason that shuttered production after a severe fire there has not affected HUN’s share price.

In addition to the fire, investors have not been discouraged by news of the company’s lower 1^st quarter revenue numbers and earnings that were 14% below consensus expectations. The ongoing strategic process at Huntsman must also serve to re-assure shareholders during a time that management has described as “close to the peak” in the base chemicals business.

Management’s internal focus also implies there is value in Huntsman’s shares. The company has stated its intent to specialize in differentiated chemicals such as pigments & polyurethanes, and the recent acquisition of Ciba Specialty Chemicals’ Textile Effects division is evidence of this direction. The company has guided for increased adjusted Ebidta during the remainder of the year, with input costs partially offset by price increases.

The company’s significant debt load and the capital expenditures expected at Huntsman during the rest of the year require that investors have a solid grasp of each segment’s ability to withstand input cost pressures and continue to generate cash.