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Tickers in this Article: HUN, DOW, BASFY
Huntsman Corporation (HUN) recently announced that it has conducted engineering studies to expand the Polyurethanes' methylene diphenyl diisocyanate (MDI) capacity at its Geismar, Louisiana facility.

In order to meet strong demand for residential and commercial insulation, Huntsman is seeking several options to expand the Geismar facility. The company expects the global market for MDI urethanes to grow strongly into the next decade.

Huntsman seeks to maintain its position as the leading MDI supplier in the Americas. It also expects that the investment in the United States will complement its previously announced expansion in China. In August 2012, Huntsman released its second quarter 2012 results. The company's adjusted earnings of 58 cents a share beat the Zacks Consensus Estimate of 54 cents. The results were also ahead of the prior-year adjusted earnings of 48 cents.

Net income, as reported, increased 9% to $124 million or 52 cents per share in the quarter from $114 million or 47 cents per share in the year-ago period.  

The improvement in earnings was driven by growth in the company's Polyurethanes business, which grew 12% on a year-over-year basis, along with the restructuring efforts undertaken by the company. These restructuring measures facilitated a 14% year-over-year improvement in its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to $365 million in the quarter.

However, Huntsman's revenues remained almost flat on a year-over-year basis at $2,914 million and missed the Zacks Consensus Estimate of $3,077 million.

Huntsman expects earnings from its Pigments business in 2012 to be below the 2011 levels. It also expects prices to decline further due to high inventory levels of titanium dioxide in the market.

Moreover, titanium-bearing ores are expected to become costlier in the third quarter. These factors might have a negative impact of $350 per ton on margins in the third quarter. In addition, weak demand from Europe will hamper Huntsman's results in the third quarter.

Huntsman, which competes with The Dow Chemical Company (DOW) and BASF SE (BASFY), currently carries a Zacks #3 Rank, reflecting a short-term (1 to 3 months) Hold rating.

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