Sales growth in the Huntsman MDI business unit slowed in the third quarter of 2018 as prices began to fall.
Sales in the sector amounted to $1.36 billion in the third quarter of 2018. By contrast, sales in the same period in 2017 were $1.2 billion, up 13% from a year earlier.
Adjusted EBIT EBITDA increased by 1% per cent from 2017 to 2018 and reached $247 million in the third quarter of 2018. Chief executive Peter Hensmay Peter Huntsman attended a conference call with financial analysts in the United States. "Earlier this year, we pointed out that our short-term profit rate soared by $40 million in the third quarter of last year," he said. We estimate that 15 million of dollars of profits are likely to soar in the third quarter of this year. We don't expect any surge in profit margins in the fourth quarter.
' The chief executive added: ' We have absorbed the 50 million-dollar impact of the unexpected shutdown of the MDI plant in Rotterdam, the Netherlands. He said it was caused by the supplier. He added: ' In the third quarter, we had digested about $50 million in raw material prices and benefited about $20 million from our recent expansion in China.
'
Compared with the third quarter of 2017, the volume of transactions in the United States market increased by 17%, of which 6% came from the acquisition of Demilec.
He added that U.S. customers are benefiting from building factories in China because Huntsman raw materials produced in the United States can now stay in China and boost local business growth. Peter Hensmay Peter Huntsman wants to remind investors that the company is shifting to high-value-added downstream products.
This is important, he said, because future declines in MDI pricing will not have much impact on profitability. Peter Huntsman, Peter Hensmay, also said we had a global risk of less than 30% in terms of component pricing.
That's because the company is entering the downstream market. "We will be more exposed to China's parts market, and over time we will make the transition as we have done in Europe and the Americas," he said.
' In downstream areas, he explained, quarterly profit margins remained the same.
That's because the company has been able to offset the rise in raw material prices. Our downstream differentiated formulation business continues to grow steadily. Our differentiated business sales increased 6% year-on-year.
' He said the company estimated that MDI demand would grow at an annual rate of 6% or 400,000 tonnes.
Peter Huntsman added that if all the expansion and new production could be carried out as planned in 2022, production capacity would grow at an annual rate of about 5% per cent.
Sean Douglass, Huntsman's chief financial officer, said the company planned to use all of its aggregated MDI produced in the United States in its downstream operations. "We need to make aggregate MDI," he said. Our plan is to acquire companies such as Damilec (Demilec), enter the downstream market, and convert parts and components into high-value goods.
' The effect of MDI high price on Huntsman is diminished