Huntsman's Q1 Results Signal a Rocky Road Ahead for Chemicals
14min read The Huntsman Corporation (NYSE:HUN) reported its first quarter 2025 earnings, delivering a mix of margin pressures, strategic challenges, and cautious optimism. While the company narrowed its net loss to $5 million from $37 million a year earlier, adjusted metrics tell a tougher story: adjusted EBITDA dropped 11% to $72 million, and revenue fell 4% to $1.41 billion. The results highlight a sector-wide struggle in chemicals, with Huntsman caught between weak demand, cost inflation, and operational hiccups.
The Mixed Financial Picture
Huntsman’s earnings call underscored a widening gap between headline improvements and underlying struggles. While the net loss shrank due to lower interest expenses and tax adjustments, adjusted results—stripped of one-time items—showed a deteriorating profit picture. The adjusted net loss swelled to $19 million from $11 million in Q1 2024, while adjusted diluted loss per share rose to $0.11 from $0.06.
Revenue declines were broad-based:- Polyurethanes, its largest segment, saw revenue dip 2% to $912 million due to lower pricing from sales mix shifts, though volumes grew on stronger demand and market share gains. - Performance Products revenue plunged 12% to $257 million, driven by unplanned outages at its German facility and weak European demand. - Advanced Materials revenue fell 5% to $249 million, with pricing pressures from currency swings and sales mix dragging margins.
Operational Challenges and Strategic Moves
CEO Peter Huntsman painted a grim picture of demand trends. “Customer order patterns remain cautious,” he said, citing weakness in construction, transportation, and industrial sectors. The company is responding with aggressive cost-cutting: - Doubling its cost-savings target to $100 million for 2025. - Reviewing strategic options for its European maleic anhydride business, with decisions expected by summer. - Reducing workforce and optimizing assets in key regions.
Liquidity remains intact, with $1.3 billion in cash and borrowing capacity, but free cash flow deteriorated to a $107 million use—$2 million worse than Q1 2024. Net debt rose to $1.62 billion, up from $1.49 billion at year-end.
Market Reaction and Risks Ahead
Investors responded harshly to the results. Huntsman’s stock fell 9.35% to $13.37 post-earnings, nearing its 52-week low of $11.90. The adjusted EPS of -$0.11 missed estimates by $0.01, while revenue fell $90 million short of expectations.
Looking ahead, Huntsman faces significant hurdles: - Inventory bloat: Inventories rose $100 million sequentially to $1.03 billion, signaling overproduction or weak demand absorption. - Geopolitical risks: Tariff complexities for its MDI (a key chemical) exports and European energy costs could further squeeze margins. - Demand uncertainty: Residential construction weakness and trade policy shifts in Asia pose lingering threats.
Conclusion: A Hold with Caution
Huntsman’s Q1 results paint a company fighting an uphill battle. While its balance sheet remains intact, the widening adjusted loss, inventory overhang, and missed revenue targets suggest near-term pain. The stock’s 9% post-earnings drop and proximity to 52-week lows reflect investor skepticism about its ability to navigate these challenges.
However, there are mitigating factors: - The 7.48% dividend yield—maintained for 19 years—offers a buffer. - Cost-cutting and asset reviews could unlock value. - Margins may stabilize if raw material prices (like ethylene) continue to fall.
For investors, Huntsman is a hold until there’s clearer evidence of demand recovery or strategic execution. The stock’s valuation—trading at ~0.6x 2024 sales—hints at discounted expectations, but risks remain elevated in a chemicals sector still grappling with macroeconomic headwinds.
Final Take: Huntsman’s path to recovery hinges on demand turning the corner and cost discipline outweighing operational missteps. Until then, caution is warranted.
