COLUMBUS, OH - Hexion Inc. announced results for the fourth quarter and year ended December 31, 2015.
“Our fourth-quarter 2015 results reflected improvement in our specialty epoxy and Versatic™ acids and derivatives businesses as well as productivity gains, offset by the negative impact of foreign currency, softer demand in Latin America and continued headwinds impacting our oil and gas related products,” said Craig O. Morrison, Chairman, President and CEO. “The structural cost savings program we began implementing earlier this year remains on track, and we have identified approximately $35 million in additional productivity savings to strengthen our position for profitable growth in response to the recent economic volatility.”
Morrison added, “Excluding the impact of currency, we were pleased to deliver an 11 percent year-over-year increase in Segment EBITDA in 2015 compared to 2014 due to the strength of our diversified portfolio and disciplined cost controls. In 2015, we also drove strong levels of cash flow from operations and successfully completed construction of two new formaldehyde sites, with a third new formaldehyde site coming online as expected in the first quarter of 2016. Looking ahead, we remain committed to driving structural decreases in our costs and carefully managing our balance sheet, while continuing to strategically invest behind our differentiated technologies.”
Net sales for the quarter ended December 31, 2015 were $909 million, a decrease of 22 percent compared with $1.16 billion in the prior-year period. The decline in net sales was primarily driven by the strengthening of the U.S. dollar against most other currencies and lower selling prices from the decline in oil-driven feedstocks. On a constant currency basis, net sales would have decreased by 14 percent for the quarter. Segment EBITDA for the quarter ended December 31, 2015 was $73 million, a decrease of 20 percent compared with $91 million in the prior-year period.
Net sales for the year ended December 31, 2015 were $4.1 billion, a decrease of 19 percent compared with $5.1 billion in the prior-year period. The decline in net sales was primarily driven by the strengthening of the U.S. dollar against most other currencies and lower selling prices from the decline in oil-driven feedstocks, which more than offset gains in specialty epoxy resins. On a constant currency basis, net sales would have decreased by 11 percent for the year. Segment EBITDA for the year ended December 31, 2015 was $466 million, an increase of 1 percent compared with $462 million in the prior year period. The increase in Segment EBITDA was primarily driven by strong growth in the company’s specialty epoxy and base epoxy resins, as well as North American forest products resins businesses.
In late 2015, Hexion identified approximately $35 million in additional productivity and cost-reduction programs, which the company will begin executing in 2016. One of these projects is a planned facility rationalization at Norco, LA, within the company’s Epoxy, Phenolic and Coating Resins segment, which it anticipates will generate approximately $20 million in annual cost savings once completed. As of December 31, 2015, Hexion had approximately $43 million in total process cost savings, the majority of which the company expects to be achieved over the next 12 to 24 months.