Huntsman Corporation’s (HUN) President and Chief Executive Officer, Peter R. Huntsman has issued a statement in order to clear doubts related to the impact of lower oil prices on the company’s business. In his response, he stated that Hunstman is set to benefit from falling oil prices in the long haul as prices of raw materials obtained from the oil refining process also tend to decline in tandem.
He further added that the company is expecteds to benefit from expanding margins owing to the declining costs of raw materials. Moreover, the company anticipates discharge of a significant working capital, which should strengthen its financial condition. As nearly one-third of the company’s business depends on consumers, Huntsman foresees that falling oil prices should spur higher consumer spending. This could bring in further gains for the company.
Huntsman is amongst the world's largest manufacturers of differentiated and commodity chemical products for a variety of industrial and consumer applications. Recently, the company unveiled its plans to cut headcount as part of its efforts to improve the competitiveness of its pigments and additives business.
The Utah-based chemical maker plans to cut roughly 900 positions (around 8% of its workforce). The move will allow it to achieve cost savings of around $130 million by mid-2016.
Huntsman has the broadest specialized pigments portfolio in the industry, following its acquisition of Rockwood Holdings’ (ROC) performance additives and TiO2 pigments businesses. Huntsman closed the acquisition of Rockwood’s assets on Oct 1, 2014. The company paid around $1 billion in cash for the buyout and assumed certain pension obligations.
With this acquisition, Huntsman is poised to better serve its customers through a broader range of products. The acquisition has also offered the company an attractive opportunity to unlock value within its pigments business. The buyout is expected to offer meaningful cost-saving opportunities, going forward.
Huntsman currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the diversified chemical space include Air Products & Chemicals Inc. (APD) and Johnson Matthey plc (JMPLY), both sporting a Zacks Rank #2 (Buy).
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