Huntsman (HUN) Q2 Revenue Falls 7.4%

Huntsman (HUN -5.05%), the global specialty chemicals company serving industries from construction to transportation, reported its financial results for the second quarter on July 31, 2025. The quarter was colored by softer demand patterns and lower sales across nearly all core segments. Revenue (GAAP) was $1,458 million, falling short of the $1,489.76 million analyst consensus. Adjusted earnings per share (Non-GAAP) registered a loss of ($0.20), below the expected ($0.13), and reversed sharply from a $0.14 profit in the same period a year ago. Overall, the quarter underwhelmed on both top and bottom lines, with profit margins squeezed by both volume declines and persistent pricing pressure, while restructuring activities swelled costs further.

Source: Analyst estimates for the quarter provided by FactSet.

Company Overview and Strategic Focus

Huntsman (HUN -5.05%) manufactures a range of specialty chemicals, with its products found in insulation, coatings, automotive components, electrical systems, and consumer goods. The company primarily operates through three segments: Polyurethanes, Performance Products, and Advanced Materials. These divisions market products including methylene diphenyl diisocyanate (MDI) for insulation, epoxy resins for electronics and aerospace, and specialty amines for fuel and water treatment.

In recent years, the company has placed a strong emphasis on innovating its core polyurethane offering, developing downstream MDI-based systems, and enhancing its global footprint through joint ventures. Huntsman’s key priorities revolve around improving product mix and innovation, maintaining strict cost discipline, managing exposure to volatile raw material prices, and strengthening its market position in regulated environments. Joint ventures, particularly in China, have long played a central role in strategy, but recent volatility and trade developments have made this a continuously evolving story.

Quarter in Review: Results, Segments, and Restructuring

During the quarter, revenue (GAAP) and earnings (non-GAAP) trailed expectations as global demand in core end-markets—especially construction and industrial sectors—remained muted. All three segments logged weaker results. Polyurethanes revenue declined 7% year over year to $932 million, while segment adjusted EBITDA dropped 61%. The business saw a 5% fall in average selling prices and a 2% dip in sales volumes, pressured by softer demand, a scheduled shutdown at the Rotterdam facility, and lower results from its China-based PO/MTBE joint venture. Management acknowledged that the usual seasonal bounce in construction demand did not materialize, directly weighing on profits and inventory levels.

Performance Products, which includes specialty amines and surfactants for refining, coatings, and cleaning markets, reported a 10% decrease in revenue alongside a 30% slide in segment adjusted EBITDA. These declines were attributed to a 9% drop in volumes, with average selling prices largely flat. Operational constraints at the Moers, Germany plant, combined with lower market activity and some inventory reduction, further undercut the division’s numbers.

The Advanced Materials segment—which produces epoxy resins used in aerospace, electronics, and coatings—also declined, with revenue down 5% and segment adjusted EBITDA down 13%. The segment attributed these declines to weaker volumes (-3%) and slightly lower selling prices, as both the coatings and aerospace end markets pulled back. Currency changes provided a slight offset, but not enough to reverse the negative trend.

Strikingly, the quarter included significant one-time costs: $124 million in restructuring, impairment, and plant closing charges versus just $4 million in Q2 2024. These costs largely stemmed from the closure of facilities such as the Maleic Anhydride plant in Germany and additional North American rationalizations. The ongoing restructuring involves approximately a 10% reduction in global workforce in 2025, reflecting an aggressive response to the current low-return environment. While these actions are aimed at enhancing long-term efficiency, they weighed heavily on this quarter’s reported profit numbers.

In terms of cash generation, free cash flow from continuing operations (non-GAAP) improved to $55 million from $5 million in Q2 2024. The company reported liquidity of roughly $1.3 billion at quarter end, with net debt rising to $1,636 million from $1,495 million six months earlier.

Management reiterated its priority to uphold the dividend through periods of weak earnings and higher restructuring costs, continuing a long-standing payout practice even with free cash flow challenges.

Business Lines and Key Strategic Drivers

The Polyurethanes segment provides MDI-based polyurethane chemicals used primarily for insulation in buildings, refrigeration, automobile seating, and consumer goods. These chemicals are in high demand due to trends in energy efficiency and lightweight materials. However, reduced construction activity and expanded tariffs on Chinese imports into North America limited both demand and pricing power. Management specifically cited that, with Chinese imports declining, North American production could see future benefits if tariffs remain in place.

The Performance Products segment focuses on specialty amines, ingredients that enable a range of formulations for fuels, lubricants, cleaning products, and coatings. Like Polyurethanes, it is highly sensitive to changes in industrial and construction activity. Volume and margin weakness indicated a subdued market, though cost-control initiatives offered some mitigation against lower top-line results.

The Advanced Materials unit markets epoxy resins used in aerospace applications, electronics, and engineering composites. Demand in aerospace and certain coatings markets softened, pulling down volumes and squeezing margins. Though management continues to back investment in innovation and R&D, the tough backdrop constrained opportunities for new product launches or notable market share gains this quarter.

Across all three segments, managing cost inflation in raw materials—especially for benzene, chlorine, and propylene oxide—remains critical. Joint ventures, like the PO/MTBE project in China, usually provide cost and market access advantages, but this quarter saw sharply reduced income from these investments as margins in China softened. The company reported approximately $20 million lower equity income from its PO/MTBE joint venture compared to Q2 2024. Ongoing progress on restructuring and cost controls, such as reduced capital expenditures and plant closings, is expected to yield further cash flow improvements amid a challenging demand environment. The company spent $33 million on research and development, flat from the prior year, demonstrating a commitment to maintaining technical leadership in its core chemistries.

Outlook: Management’s View and What to Watch

Looking ahead, management signaled caution, emphasizing that the demand, pricing, and margin trends seen recently are likely to persist at least through the next quarter. There was no explicit quantitative guidance for revenue or earnings, with leadership choosing to refrain from forecasting given continuing uncertainty about trade policy and end-market recovery.

Planned capital expenditures stand at $180–$190 million for the year. Other key issues for investors are the ongoing progress of restructuring savings, whether demand for MDI-based products and specialty materials will recover, and how sustained tariff barriers might influence order volumes and pricing power in North America. Additionally, extended pressure on joint venture earnings from China, along with regulatory developments related to trade and environmental policy, will be central factors determining results in coming periods.

Management described the dividend payout as a priority to maintain, even amid lower earnings and ongoing operational turnarounds. No changes to dividend policy or forward payout were declared.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.