Huntsman’s 3Q17 Expectations amid Hurricane Harvey Impact
Huntsman’s updates on 3Q17
On September 18, 2017, Huntsman (HUN) provided insights into what to expect for its upcoming 3Q17 earnings. It’s well known that HUN’s Texas Gulf Coast region was impacted by Hurricane Harvey. It expects the facility to be fully operational once the engineering and safety checks are completed and there are available raw materials.
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The impact of Hurricane Harvey has resulted in pushing the planned turnaround activity of Port Neches to October, resulting in HUN’s EBITDA (earnings before interest, tax, depreciation, and amortization) being negatively impacted in the range of $15.0 million to $20.0 million in 4Q17. HUN estimates that its 3Q17 EBITDA will be adversely affected about $35.0 million to $40.0 million. The impact is expected to be mainly in its Performance Products segment. However, HUN expects its 3Q17 results from continuing operations to be better than 2Q17, driven by the strong demand for polyurethanes and improved recovery of its Performance Products business.
Peter Huntsman, president and chief executive officer of HUN, said, “Hurricane Harvey was a devastating storm that caused widespread flooding in the Texas Gulf Coast region and displaced many from their homes.” He added, “While our operations in the region were temporarily disrupted, there was no significant damage to any of our manufacturing sites and, except for the planned turnaround at our Port Neches, Texas facility, all are either now operating or are in the process of returning to normal operations. We are proactively pursuing the turnaround at Port Neches to minimize the amount of downtime and return supply to our customers. Importantly, I am pleased with the strong business results that allow us to mitigate these losses such that our total adjusted EBITDA outlook for the third quarter is better than second quarter.”
HUN’s stock performance
HUN remained weak with its stock falling 1.8% and closing at $27.32 for the week ended September 22, 2017. Despite a fall in the stock, HUN traded 5.4% above the 100-day moving average price of $25.92. So far in 2017, the stock has risen 41.9%. Analysts are projecting a further upside of 15.5% over the next 12 months from the closing price on September 22, 2017.
Investors looking to hold HUN indirectly can invest in the First Trust Materials AlphaDEX ETF (FXZ), which has invested 2.8% of its portfolio in Huntsman. The fund also provides exposure to Westlake Chemical (WLK), Owens Corning (OC), and Eastman Chemical (EMN) with weights of 3.9%, 3.6%, and 2.6%, respectively, as of September 22, 2017.