Huntsman Corporation's Strategic Shift: A $75M Write-Off Masks Long-Term EBITDA Potential

The chemical industry is no stranger to cyclical turbulence, but Huntsman Corporation's recent decision to close its Moers, Germany facility—marking a $75 million non-cash impairment charge—reveals a calculated move to pivot toward resilience. While the write-off has drawn investor scrutiny, the strategic rationale behind this shift offers a compelling case for long-term value creation. Let's dissect the implications of this move, its impact on EBITDA, supply chain dynamics, and why the stock presents a contrarian opportunity.

The Strategic Calculus: Cost Cuts vs. EBITDA Gains

The closure of the German Maleic Anhydride plant, which reported a $10 million EBITDA loss in 2024, is a textbook example of cutting underperforming assets. By relocating European customers to its North American facilities in Pensacola and Geismar, Huntsman aims to capitalize on operational synergies and lower production costs. This move isn't just about cost-cutting—it's about reengineering profitability.

The $75 million impairment is a one-time hit, but the savings from shutting a loss-making plant and consolidating operations could translate to annualized EBITDA improvements of at least $10 million post-2025. Pair this with Huntsman's 2026 EBITDA growth forecast (up 174% from 2025 lows), and the narrative shifts from short-term pain to long-term gain.

Supply Chain Risks? Or a Strategic Hedge?

Critics may question the wisdom of shifting production to North America amid potential supply chain hurdles. However, Huntsman's North American facilities already serve global markets, and the company has invested heavily in logistics infrastructure. The risk of increased shipping costs to Europe is mitigated by two factors:
1. Lower production costs in the U.S.: Labor and energy expenses are structurally cheaper than in Germany.
2. Reduced overhead: Closing the Moers plant eliminates fixed costs tied to an underutilized facility.

Moreover, the geopolitical volatility in Europe—exemplified by energy price swings—adds another layer of risk to maintaining the German operation. By centralizing production in North America, Huntsman reduces exposure to regional instability while leveraging a more stable, scalable base.

Valuation: A Discounted Asset with a Turnaround Catalyst

Huntsman's stock trades at a deeply discounted valuation, offering a margin of safety for contrarian investors. Key metrics underscore the opportunity:

• Forward P/E of 11.35 (2026): A stark contrast to its current negative P/E ratio, reflecting expectations of a turnaround as losses narrow.
• Dividend Yield of 8.78%: While the payout ratio is negative due to 2025 losses, the dividend could stabilize once 2026 EPS turns positive ($0.44 forecast). This yield is a rare income play in a sector rife with cuts.
• Analyst Price Targets: The average $15 target implies a 33% upside from current levels, with bulls like JP Morgan seeing $20. Even cautious "Hold" ratings reflect a market underappreciating Huntsman's restructuring gains.

Why Act Now?

The stock's current valuation already prices in the impairment charge and near-term earnings headwinds. The key catalyst? 2026 EPS growth of 174%, which hinges on two achievable levers:
1. Cost savings from closures and restructuring ($21M in total projected savings by 2027).
2. Volume recovery in key markets: Construction and transportation demand, while muted now, are cyclical. Huntsman's focus on high-margin specialty chemicals positions it to capture upside when demand rebounds.

The Contrarian Play

Huntsman's decision to pivot away from Europe's volatility and toward North American efficiency is a bold, albeit painful, move. The $75 million impairment is a necessary cost to escape a losing proposition. For investors, the discounted valuation and dividend yield create a rare asymmetric opportunity: limited downside (supported by $334M cash and a $1.3B liquidity buffer) and substantial upside if Huntsman executes its restructuring.

The time to act is now—before the market catches up to the EBITDA improvements baked into the 2026 forecasts. Huntsman isn't just surviving this cycle; it's positioning itself to dominate the next one.

Investment thesis: Buy HUN at current levels, target $15–$20 by mid-2026. The pain of today's impairment is the fertilizer for tomorrow's EBITDA growth.