Hexion clocks US$921 mln Q4 net loss on merger termination costs

05-Mar-09

Hexion Specialty Chemicals, Inc., posted a net loss of US$921 mln for Q4 - 2008 versus a net loss of US$63 mln the same period last year mainly due to an operating loss of US$876 mln against US$21 mln for the same quarter last year. The Q4 operating loss was primarily impacted by US$800 mln in terminated merger and settlement costs, which included legal fees and settlement costs associated with litigation relating to the Huntsman Corporation transaction. Owing to decline in volumes, extended plant shutdowns and reduced operating rates negatively impacted the Q4 Segment EBITDA which stood at US$46 mln against US$125 mln for the comparable period last year. "In addition to the impact of the merger termination and settlement costs, Hexion faced extremely challenging market conditions in the fourth quarter of 2008 as our results were negatively impacted by dramatically lower volumes, inventory destocking by customers and extended customer shutdowns due to the global economic slowdown," said Craig O. Morrison, Chairman, President and CEO. For full year, Hexion recorded a net loss of US$1,190 mln in 2008 compared to a net loss of US$65 mln in the prior year. "We are anticipating that market conditions will remain challenging in 2009. Based on operating trends to date in the first quarter of 2009, we expect first quarter volumes and operating margins to be in line with the fourth quarter of 2008." continued Morrison. The company announced expanding its previously announced US$60 mln productivity program for year 2009 to a revised target of approximately US$100 mln to further improve the efficiency of its business. According to the company, this can be generated primarily in two areas: manufacturing and commercial, with US$56 mln in targeted savings; and support services, with US$44 mln in targeted savings. Morrison explained, "We are also encouraged by the recent relief we have seen in raw material prices, although these have historically been volatile. We are aggressively reducing costs and taking incremental actions to conserve cash."